annual report 2011/2012 - 預金保険機構 · • second bridge bank of japan, ltd. (2nd bbj) •...

DEPOSIT INSURANCE CORPORATION OF JAPAN

April 2011－March 2012

AN

NU

AL R

EP

OR

T 2

01

1/

20

12

DEPO

SIT INSU

RANCE C

ORPO

RATIO

N OF JA

PAN

ANNUAL REPORT 2011/2012

This Annual Report was produced based on the English translation of the original Annual Report in Japanese. The original Annual Report in Japanese shall govern for all purposes and prevail in case of any discrepancy with this Annual Report.

This Annual Report covers the DICJ’s activities from April 2011 to March 2012.

Over a year has passed since the Great East Japan Earthquake. All the Japanese people have been earnestly striving toward reconstruction, and firm financial support is imperative in order to sustain these efforts.

In the global market, in parallel to the policy responses for stabilizing the financial system in Europe, progress is being made in international discussions on reforms of financial regulation and supervision in order to prevent the recurrence of financial crises in the future. In this context, it was internationally agreed at the G20 Cannes Summit last November on resolution frameworks and other policies concerning systemically important financial institutions (SIFIs). Necessary policy responses were to be implemented at the national level.

In the midst of these changes to the domestic and international environment, the Deposit Insurance Corporation of Japan (DICJ) will seek to maintain effective operational postures to enable us to appropriately carry out our mission as a safety-net provider. We also intend to pursue further improvements on our organizational efficiency.

This annual report provides a summary of the DICJ’s operations in FY2011.

The DICJ focused in FY2011, as in the previous year, on the resolution process for the Incubator Bank of Japan, Ltd., the first resolution case under the limited coverage, serving as both the national deposit insurer and the bank’s financial administrator. This entailed transferring shares of the Second Bridge Bank of Japan, Ltd., a temporary bridge bank, to AEON Bank, Ltd., a final assuming financial institution, in December last year, and making final settlement payments for the purchase of deposits and other claims of the Incubator Bank from April this year.

The DICJ continued to offer guidance and advice to the Resolution and Collection Corporation (RCC), the organization entrusted with the collection of non-performing loans previously purchased from failed financial institutions, to ensure that thorough consideration be given to customer protection. Regarding difficult recovery cases, particularly the cases involving antisocial forces, we have been providing support for rigorous handling by the RCC using inspections of assets and civil proceedings to uncover debtors’ concealed assets.

As noted at the beginning, in order to provide firm financial support to the areas hit by the Great East Japan Earthquake, the Act on Special Measures for Strengthening Financial Functions was utilized to devise measures for providing assis-tance to relevant financial institutions. The DICJ accordingly subscribed preferred shares and other notes for financial institutions whose capital injection had been approved in line with this same Act. The Act stipulates as an exceptional measure for cooperative financial institutions that capital participation in these financial institutions can be abandoned should their financial conditions worsen to a certain degree. In addition, we steadily carried out our role, pursuant to the relevant laws and regulations, as the founder to establish Corporation for Revitalizing Earthquake-Affected Business, an organization created to help rehabilitate debtors in the afflicted areas.

In the area of international cooperation, the DICJ has been actively contributing to the activities of the International Association of Deposit Insurers (IADI), with our Deputy Governor being elected as the Chair of IADI’s Asia-Pacific Regional Committee and serving as the Vice Chair of IADI’s Financial Planning Committee. We also hosted the 6th DICJ Round Table in March this year, featuring participation from 14 countries/regions, where views were exchanged on Japan’s experiences during the Heisei Financial Crisis as well as on current issues.

In the area of research activities, the DICJ has been studying the latest developments related to the deposit insurance systems and failure resolution schemes both inside and outside Japan in order to reflect new developments in our own policy decisions. Some of these findings have been compiled in our research journal, “Deposit Insurance Review.”

We have continuously facilitated efforts to publicize relief procedures for victims of bank transfer fraud. As a conse-quence of the study undertaken by the Project Team on Issues Surrounding Payments to Deposit Insurance Corporation Stipulated in the Criminal Accounts Damage Recovery Act, ordinances of the competent ministries were amended to include provisions for scholarship loans for the children of crime victims as well as subsidies for organizations provid-ing support for crime victims.

Message from the Governor

I believe that the last fiscal year was a preparation period for a new era, as the handling of the Heisei Financial Crisis was concluded. That is, the revised Deposit Insurance Act passed in May last year solidified measures pertaining to the final settlement of Jusen housing loans in accordance with the settlement measures prescribed at the time of the crisis 15 years ago, without depending on taxpayer funding, and additionally granted new bridge bank functions to the RCC. The Act also added to the DICJ another function of purchasing/collecting loans by financial institutions to antisocial forces. Accordingly, the DICJ has made steady efforts to close the Account for Disposal of Claims and Debts of Specific Jusen Companies and to put in place specific preparations for its newly acquired responsibilities. The DICJ also revised the deposit premium rate, in response to the situation where the deposit insurance fund turned positive at the end of FY2010 from the deficit of over four trillion yen at the end of FY2002.

As stated above, I believe that FY2012 will mark the dawning of a new age for our organization, and we are committed to fulfilling our expected roles even more pro-actively.

In closing, I would like to ask for your continued support for the DICJ. All the DICJ’s executives and staff members pledge to make every possible effort for efficient business operations in order to meet the expectations and trust of depositors and Japanese people.

August, 2012

Masanori Tanabe Governor

Deposit Insurance Corporation of Japan Annual Report 2011/2012Contents

I. DICJ’s Operations 1

1. DICJ’s Operations and Deposit Insurance System ·················································································2(1) Basic Mechanism of the Deposit Insurance System ······························································································ 2

(2) DICJ’s Mission and Operations ····························································································································· 2

(3) Outline of the Deposit Insurance System ··············································································································· 5

(4) Operations of the Financial Administrator ··········································································································· 13

2. DICJ’s Structure and Organization ········································································································14(1) Establishment ······················································································································································· 14

(2) Organization ························································································································································· 14

(3) Subsidiaries of the DICJ ······································································································································· 20

II. Overview of the DICJ’s Activities 23

1. Improvement and Enhancement of the Failure Resolution Framework of Financial Institutions from the Perspective of Depositor Protection ···················································24(1) Preparations, Training, etc. for Failure Resolution under Limited Coverage ······················································ 24

(2) Promoting Maintenance of Depositor’s Name-based Aggregation Database and Improvement of the System · 27

(3) On-site Inspections ··············································································································································· 29

(4) Collaboration among Persons Undertaking On-site Inspections, System Verification and Training/Advice ····· 30

2. Proper and Steady Operations Related to Failure Resolution and Asset Holdings ···························31(1) Implementation of Financial Assistance etc. and Collection of Assets ······························································· 31

(2) Management and Disposal of Assets Purchased from Failed Financial Institutions ··········································· 33

(3) Purchase/Collection of Specified Difficult Recovery Claims ·············································································· 38

(4) Operations Related to Banks under Special Public Management ········································································ 39

(5) Management and Disposal of Assets Purchased from Sound Financial Institutions ··········································· 40

(6) Operations Related to the Resolution of the Failure of the Incubator Bank ························································· 41

3. Supporting Resolution and Collection Operations and Proper Implementation of Pursuit of Liability ····································································································································47(1) Asset Investigation ··············································································································································· 47

(2) Support for Collection Operations in Difficult Recovery Cases ·········································································· 47

(3) Pursuit of Civil Liability ······································································································································ 47

(4) Pursuit of Criminal Liability ································································································································ 48

4. Operations Related to Capital Injection ·································································································51(1) Operations Related to Capital Injection ··············································································································· 51

(2) Capital Injection and Disposal under Relevant Acts ···························································································· 55

5. Proper Implementation of Operations Related to Procedures for Criminal Accounts Damages Recovery ····································································································································61(1) Posting of Public Notices by the DICJ ················································································································· 61

(2) Three Main Public Notices Posted in FY2011 ····································································································· 62

(3) System of Money Transfers from Financial Institutions to the DICJ and the Use of Transferred Money ·········· 62

(4) Status of the Utilization of Public Notices ··········································································································· 64

6. PR Activities to Ensure Public Awareness of the Deposit Insurance System and the DICJ’s Operations ······················································································································65(1) PR Activities Utilizing Various Media ················································································································ 65

(2) Response to Inquiries ··········································································································································· 65

7. Promotion of Efforts to Ensure Sound and Efficient Finances ····························································67(1) Financial Conditions ············································································································································ 67

(2) Funding and Investment (Fund Management) ····································································································· 73

(3) Deposit Insurance Premium Rates ······················································································································· 78

8. International Cooperation and Research & Study Activities Regarding Deposit Insurance ············80(1) International Cooperation ····································································································································· 80

(2) Research & Study Activities ································································································································ 89

9. Preparation and Announcement of the Medium-Term Goals, Operational Policy and Performance Evaluation ··························································································································92

III. Annex 123

1. I. DICJ’s Operations ·····························································································································124(1) Historical Development of the Deposit Insurance System (As of March 31, 2012) ·········································· 124

(2) Historical Development of Special Measures for the Contracted Bank, the Specified Contracted Bank and

the Claim Resolution Company (As of March 31, 2012) ·················································································· 126

2. II. Overview of the DICJ’s Activities in FY2011 ················································································129(1) List of Capital Injection Operations (for each Act) ···························································································· 129

(2) Capital Injection Scheme ··································································································································· 136

(3) Overview of Settlement of Accounts in FY2011 ······························································································· 144

(4) Balance Sheets, and Profit and Loss Statements ······························································································· 154

(5) Income and Expenditures on a Fiscal Year Basis (General Account) ······························································ 170

(6) Trends in the Eligible Deposits and Liability Reserves ···················································································· 171

(7) Trends in the Eligible Deposits by Sector of Financial Institutions ·································································· 172

(8) Trends in the Number of Insured Financial Institutions ··················································································· 174

[Acts]• Deposit Insurance Act

• Act on Emergency Measures for Financial Functions Stabilization

(Former Financial Functions Stabilization Act)

• Act on Emergency Measures for the Revitalization of the Financial Functions (Financial Revitalization Act)

• Act on Emergency Measures for Early Strengthening of Financial Functions (Early Strengthening Act)

• Act on Special Measures concerning Promotion of Disposal of Claims and Debts of Specific Jusen Companies

(Jusen Act)

• Act on Special Measures for Promotion of Organizational Restructuring of Financial Institutions

(Organizational Restructuring Act)

• Act on Special Measures for Strengthening Financial Functions (Financial Functions Strengthening Act)

• Act on Special Treatment of Corporate Reorganization Proceedings and Other Insolvency Proceedings of

Financial Institutions (Special Corporate Reorganization Act)

• Act on Damage Recovery Benefit Distributed from Fund in Bank Accounts Used for Crimes

(Criminal Accounts Damage Recovery Act)

[Accounts]• Account for Early Strengthening of Financial Functions (Early Strengthening Account)

• Account for Disposal of Claims and Debts of Specific Jusen Companies (Jusen Account)

• Financial Institutions’ Management Base Strengthening Account (Management Base Strengthening Account)

[Organizations]• Deposit Insurance Corporation of Japan (DICJ)

• Resolution and Collection Corporation (RCC)

• Housing Loan Administration Corporation (HLAC)

• Resolution and Collection Bank (RCB)

• Second Bridge Bank of Japan, Ltd. (2nd BBJ)

• Industrial Revitalization Corporation of Japan (IRCJ)

• Enterprise Turnaround Initiative Corporation of Japan (ETIC)

• Seven Specific Jusen Companies stipulated in the Jusen Act (seven former Jusen Companies)

• Incubator Bank of Japan, Limited (Incubator Bank)

• The Financial Services Agency (FSA)

• Corporation for Revitalizing Earthquake-Affected Business (Corporation for Revitalizing Business)

• The Agricultural and Fishery Co-operative Saving Insurance Corporation (AFCSIC)

[Delegation of authority]• In cases where the Prime Minister delegates authority to the FSA Commissioner, authority shall be given to the

FSA Commissioner.

Abbreviations and others in this annual report

Deposit Insurance Corporation of Japan

1. DICJ’s Operations and Deposit Insurance System

(1) Basic Mechanism of the Deposit Insurance System(2) DICJ’s Mission and Operations(3) Outline of the Deposit Insurance System(4) Operations of the Financial Administrator

2. DICJ’s Structure and Organization

(1) Establishment(2) Organization(3) Subsidiaries of the DICJ

I. DICJ’s Operations

I. DICJ’s OperationsI. D

ICJ’s

Operations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness

7. Finances8. International C

ooperation

9. The Medium

-Term

Goals

and Operational

Policy

III. Annex

1

(1) Basic Mechanism of the Deposit Insurance System

Under the deposit insurance system of Japan, financial institutions pay insurance premiums to the Deposit Insur-ance Corporation of Japan (hereinafter referred to as the “DICJ”) and the DICJ makes a certain amount of insur-ance payouts to protect depositors in the event of a failure of a financial institution. The deposit insurance system has been adopted in many countries around the world.As shown in the figure below, when a depositor makes a

deposit at a financial institution covered by the deposit insurance system, an insurance relationship is automati-cally established among the depositor, the financial insti-tution and the DICJ based on the Deposit Insurance Act; in other words, a three-way relationship of trust is estab-lished among these three parties in this case.Insurance premiums, which constitute the fund source of the deposit insurance system, are paid to the DICJ every year by financial institutions in accordance with the total amount of their deposits during the previous fiscal year.Depositors are not required to make any special arrange-ments for deposit insurance.

1. DICJ’s Operations and Deposit Insurance System

(2) DICJ’s Mission and Operations

The objective of the Deposit Insurance Act is to establish the deposit insurance system and to contribute to the maintenance of stability of the financial system in order to protect depositors and others and ensure the settlement of funds related to failed financial institutions. The mission of the DICJ is to appropriately manage the deposit insurance system for achieving its objective, specif ical ly by conduct ing the fol lowing four operations.

(i) Deposit Insurance The DICJ engages not only in the collection of deposit insurance premiums but also conducts other operations such as on-site inspection, system verifi-cation and training to enhance depositors’ name-based aggregation database, which will become necessary when making insurance payouts to deposi-tors. Furthermore, the DICJ also strives to enhance easy-to-understand public relations materials to help raise public awareness of the deposit insurance system and the DICJ’s operations.

In cases where a financial institution has failed after suspending deposit repayments, etc., the DICJ, as part of the normal procedures, makes insurance payouts to protect eligible deposits up to a certain amount (limited coverage), and provides financial assistance, more specifically, monetary grants and the purchase of assets of failed financial institutions, etc., to the assuming financial institution or assum-ing bank holding company (hereinafter referred to as the “assuming financial institution, etc.”), which will take over the business operations of the failed finan-cial institution or implement a merger or other bailout measure.

Basic mechanism of the deposit insurance system

DepositsDepositors

Insurable contingency(Suspension of deposit repayment,

cancellation of the business license, etc.)

Insurance payout(Limited coverage)

Deposit insurancepremium

DICJ

Financial institutions

I. DIC

J’sO

perations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

III. Annex


2

(ii) Failure resolutionWhen appointed as a financial administrator, the DICJ undertakes operations such as the maintenance, continuation and transfer of business operations of a failed financial institution, and if any assuming financial institution, etc., does not come forward immediately, the DICJ will be responsible for the business management of a bridge bank to which the business operations of failed financial institution are temporarily transferred.In addition, the DICJ may purchase deposits beyond those protected by deposit insurance, and other claims as necessary. Moreover, if the Prime Minister recognizes that an extremely serious hindrance is posed to the maintaining of financial system stabil-ity, the DICJ undertakes the implementation of measures to deal with financial crisis, such as providing full protection for deposits and conducting special crisis management of the failed financial institution (acquisition of all outstanding shares).

(iii) Purchase of non-performing loans, and pursuit of liabilities of managers The DICJ strives to facilitate the collection of assets (debt claims, shares, etc.) acquired from failed finan-cial institutions through the Resolution and Collec-tion Corporation (hereinafter referred to as the “RCC”) as a contracted bank, which takes charge of the collection.Furthermore, the DICJ entrusts the purchase and

recovery of specified difficult recovery claims held by financial institutions to the RCC with the aim of maintaining the stability of the financial system through securing soundness in the assets of financial institutions by blocking the relationships with antiso-cial forces, etc. In order to support the collection of claims held by the RCC, a contracted bank, the DICJ appropriately conducts asset investigations regarding malicious debtors including antisocial forces in obstructed recovery cases, and also pursues civil and criminal liabilities of former managers of failed financial institutions and other parties concerned.

(iv) Capital injectionAs the operator of a financial system safety net that includes public capital injections, etc., the DICJ undertakes operations such as subscribing to shares to prevent the failure of financial institutions (capital injections intended as measures against financial crises under the Deposit Insurance Act) and subscrib-ing to shares to strengthen financial functions (capital injections based on the Act on Special Measures for Strengthening Financial Functions (hereinafter referred to as the “Financial Functions Strengthening Act”). The DICJ also strives to conduct proper management and smooth disposal of preferred shares and other capital-raising instruments acquired through capital injections.

DICJ’s major operations

Deposit insurance

*Collection of insurance premiums* Enhancement of depositors’ name-based aggregation database, etc. (on-site inspection, system verification, and guidance and advice)

* Insurance payout and partial payment (limited coverage)

* Financial assistance to assuming financial institutions* PR activities related to deposit insurance system and DICJ operations

Capital injection

* Capital injection as a measure to deal with a financial crisis

* Capital injection intended to strengthen financial functions

* Management and disposal of preferred shares and other capital-raising instruments acquired through capital injection

Failure resolution

*Operations related to financial administrators, etc.*Purchase of deposits and other claims* Full protection of deposits and special crisis manage-ment as measures to deal with a financial crisis

Purchase of non-performing loans, and pursuit of liabilities of former managers

and malicious debtors

* Collection of assets obtained from failed financial insti-tutions

* Purchase and recovery of specified difficult recovery claims

*Asset investigation regarding malicious debtors* Pursuit of civil and criminal liabilities of former managers of failed financial institutions and other parties concerned

Note: In addition to the operations described above, the DICJ has been in charge of placing public notices related to the procedures for the payment of damage recovery benefits based on the Act on Damage Recovery Benefit Distributed from Fund in Bank Accounts Used for Crimes (hereinafter referred to as the “Criminal Accounts Damage Recovery Act”).


ICJ’s

Operations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

III. Annex

3

What will happen should a financial institution fail?As its name suggests, the deposit insurance system is intended primarily to provide for the payment of insurance claims when an insurable contingency occurs. Specifically, there are two methods of protec-tion: the insurance payout method, whereby insurance payouts are made directly to depositors, and the financial assistance method, whereby the business of a failed financial institution is transferred to an assuming financial institution and the DICJ provides financial assistance to that institution.To illustrate how this works, let us consider the scenario of a financial institution failing on a Friday and the DICJ being appointed as the financial admin-istrator (here, we assume the adoption of the financial assistance method). In such a case, the DICJ dispatches staff to the failed financial institution and has them undertake the work of the financial admin-istrator. The staff make preparations to enable the

financial institution to resume business the following Monday so that deposits covered by the deposit insur-ance system (insured deposits) can be repaid to depositors based on the identification of deposits for each depositor (name-based aggregation of deposits) at the time of the failure. After resuming business the following Monday, the failed financial institution repays insured deposits and carries out operations related to payment and settlement. Ultimately, the DICJ will look for a financial institution to which the failed financial institution’s assets that are sound or not seriously impaired (i.e. assumable assets) and insured deposits can be transferred, and it will provide necessary financial assistance to facilitate the transfer. Meanwhile, uninsured deposits and other debts will be repaid about 1 year later based on a revitalization plan formulated in accordance with the Civil Rehabilitation Act. The figure below shows the flow of resolution procedures.

Column 1: How does the deposit insurance system work?

The above gives an overview of the resolution process followed by the DICJ.In addition, the current legal system also provides for measures to be taken when it is recognized that an extremely serious hindrance could jeopardize the maintenance of the stability of the financial system in Japan or in a certain region where financial institu-tions are conducting business. In such a crisis, depos-its and other claims may be fully protected as a measure against a crisis in accordance with Article 102 of the Deposit Insurance Act, subject to a resolu-tion by the Financial System Management Council chaired by the Prime Minister. Also, capital injection into a financial institution may be made. (Note)

During the past financial crises in Japan, similar functions were exercised so as to implement such measures as full protection of deposits and public

management of and capital injections into financial institutions. The DICJ’s holdings of shares in many financial institutions resulted from measures taken to deal with a financial crisis or those taken under the capital injection scheme that is intended to stabilize and enhance Japanese financial functions. The DICJ will continuously implement its appropriate manage-ment and settlement procedures.Note: Among capital injections into financial institutions other

than those based on the Deposit Insurance Act (deposit insurance system) are capital injections based on the Finan-cial Functions Strengthening Act. Capital injections based on the Financial Functions Strengthening Act are intended to ensure sound and efficient operation of financial institu-tions and revitalize regional economies. Such capital injec-tion has already been made into some financial institutions. [See P51: II. 4]

Assuming financialinstitution

(Business transferee)

(Financial assistance)

(Name-based aggregation of deposits)

(Separation of assets)

(Liquidationdividend)

DICJ(= Financial administrator)

Insureddeposits

Uninsureddeposits

Depositors

Assumableassets

Non-performing assets

Failed financialinstitution

I. DIC

J’sO

perations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

III. Annex


4

(3) Outline of the Deposit Insurance System

(i) Formation of a deposit insurance relationshipA deposit insurance relationship among depositors, financial institutions and the DICJ is automatically formed in accordance with the Deposit Insurance Act when the insured financial institutions described in (ii) below accept the eligible deposits, etc. described in (iii) below from the depositors.

(ii) Insured financial institutionsThe financial institutions covered by the deposit insurance system are as follows:a. Banks stipulated in the Banking Actb. Long-term credit banks stipulated in the Long-

Term Credit Bank Actc. Shinkin banksd. Credit cooperativese. Labor banksf. The Shinkin Central Bankg. The Shinkumi Federation Bankh. The Rokinren Banki. The Shoko Chukin BankNotes:

• At present, no long-term credit banks stipulated in the Long- Term Credit Bank Act exist.

• Overseas branches of the above financial institutions, government related financial institutions, and Japanese branches of foreign banks are not covered by this system.

• The Norinchukin Bank, agricultural cooperatives, fishery cooperatives, and others are members of the Agricultural and Fishery Cooperative Savings Insurance Corporation.

• Securities companies belong to the Investor Protection Fund, and life and non-life insurance companies belong to the Life Insurance Policyholders Protection Corporation of Japan and the Non-life Insurance Policyholders Protection Corporation of Japan, respectively.

(iii) Eligible deposits, etc.The deposits, etc. that fall within the scope of the deposit insurance system are as follows:a. Depositsb. Installment savingsc. Installment depositsd. Money trusts under the guarantee of principal

(including loan trusts)e. Bank debentures (limited to custody products)However, the following deposits, etc. are not eligible for insurance:a. Foreign-currency depositsb. Negotiable certificates of depositsc. Subscribed bank debentures and bank debentures

whose custody agreement has expiredd. Loan trusts whose rights of beneficiary are

recorded in the transfer of corporate bonds, shares, other securities or trusts issuing beneficiary certif-

icates that are subject to the Act on Book-Entry Transfer of Company Bond, Shares, etc.

e. Deposits, etc. in special international financial transaction accounts (Japan offshore market accounts)

f. Deposits, etc. from the Bank of Japan (excluding treasury funds)

g. Deposits, etc. from insured financial institutions (excluding those related to the investment of defined contribution pension reserves)

h. Deposits, etc. from the DICJi. Anonymous bank accounts Furthermore, the following deposits, etc. are

excluded from protection under the deposit insur-ance system:

a. Deposits, etc. held in an account opened in the name of a person other than the actual depositor (including deposits held in an account opened under a fictitious or false name)

b. Deposits, etc. to be relent to third parties

(iv) Scope of protection1) Scope of protection of deposits, etc.Regarding the amount of deposits, etc., to be protected by the deposit insurance system when a financial institution has failed, among eligible depos-its, etc., deposits falling under the category of depos-its for payment and settlement purposes (those meeting the three requirements of bearing no inter-est, being payable on demand, and being eligible for payment and settlement services) are fully protected, while deposits, etc., falling under other categories (hereinafter referred to as “general deposits, etc.”) are protected up to ¥10 million in principal plus interest thereon payable until the day of failure per depositor per financial institution (deposits that are covered by the deposit insurance within the predeter-mined limit are called “insured deposits”).Regarding the portion of general deposits, etc., that are in excess of this limit, as well as non-eligible deposits, etc., repayment is made according to the status of the failed financial institution’s assets. Thus, these deposits, etc., are subject to deduction.

Note: While not protected by deposit insurance, when a financial institution continues its business operations after failure, interest on deposits may be paid from the day after the day of failure (however, the interest rate may be reduced).


ICJ’s

Operations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

III. Annex

5

2) Scope of protection of settlement obligationsThe obligations (limited to cases of payment in Japanese yen) assumed by the insured financial insti-tutions concerning transactions related to the settle-ment of funds (funds transfers, transactions for settlement of bills and checks at the clearing house and those concerning self-addressed checks drawn by financial institutions) are called settlement obliga-tions (Note), and they are fully protected. For example, an obligation of an insured financial institution arising from funds transfers requested by a customer where the funds received from the customer have not been transferred to the payee at the time of the finan-cial institution’s failure falls under this category.Note: The settlement obligations which are not accepted as

deposits for payment and settlement purposes or general deposits, etc. are called specified settlement obligations, and settlement obligations treated as suspense receipts, etc. in accounting fall under this category.

However, the obligations arising from transactions which are based on funds transfers and the settle-ment of bills and checks at the clearing house and which are conducted or entrusted by insured finan-cial institutions or other financial business operators do not fall under the category of the settlement obligations if the transactions are conducted or entrusted by them as part of their own business.

(v) Deposit insurance premiumDeposit insurance premiums constitute a source of funds for operations such as financial assistance and insurance payout, and insured financial institutions must pay their insurance premiums to the DICJ. An insured financial institution calculates the amount of premiums it must pay by multiplying the insurance premium rate by the balance of eligible deposits, etc.

for the previous fiscal year (the average daily balance for business days during the previous fiscal year) with regard to each of general deposits, etc., and deposits for payment and settlement purposes and pays its insurance premiums within the first three months of each fiscal year (semiannual install-ments are also acceptable).The deposit insurance premium rate, which is to be determined in light of factors such as the need for keeping the DICJ’s finances balanced in the long term, may be changed subject to a decision of the Policy Board upon authorization from the FSA Commissioner and the Minister of Finance. Subse-quently, the deposit insurance premium rate is publicly announced in the Official Gazette. The effective rate was set at 0.084% in FY2002 follow-ing the abolition of the special insurance premium and has been kept at that level in light of the fact that the total of the standard and special insurance premium rates was 0.084% from FY1996 to FY2001 and that the Deposit Insurance Act stipulates that the rate should be set so as to keep the DICJ’s finances balanced over the long term.Given the DICJ’s finances, the domestic and inter-national conditions, and the burden of deposit insur-ance premiums on financial institutions, the deposit premium rate was changed in March 2012, and has been applied to FY2012. Concurrently, a mecha-nism allowing the rate to subsequently lower under certain conditions was introduced. [See P78: II. 7. (3) for details.]In accordance with a recommendation made by the Financial System Council in September 2002 to the effect that it is appropriate to set the insurance premium rate for deposits for payment and settle-ment purposes at a higher level than that for other

Scope of protection of deposits, etc.Types of deposits, etc. Scope of protection

Eligible deposits, etc.

Deposits for payment and settlement purposes

Current deposits, ordinary deposits, etc. that bear no interests

Full protection

General deposits, etc.

Interest-bearing ordinary deposits, time deposits, deposits at notice, savings deposits, deposits for preparation of taxes, installment savings, installment deposits, money in trusts with guarantee of principal (including loan trusts), bank debentures (limited to custody products), etc.

Protection up to a total of ¥10 million in principal (Note 1) plus interest, etc., thereon payable until the day of failure. (Note 2)

Repayment for the portion of deposits that is in excess of ¥10 million in principal plus interest, etc. thereon is made according to the state of the failed financial institution’s assets (subject to deduction).

Non-eligible deposits, etc. Foreign-currency deposits, negotiable certificates of deposits, bank debentures (subscribed debentures and those whose custody agreement has expired), etc.

No protection Repayment is made according to the state of the failed financial institution’s assets (subject to deduction).

Notes: 1. Under the current arrangement, in cases where financial institutions merge or the entire business of a financial institution is transferred to another, the amount of deposits to be protected per depositor will be ¥10 million in principal multiplied by the number of financial institu-tions involved in the merger or the business transfer and interest thereon for a limited period of up to 1 year after such merger or business transfer takes place.

2. Reimbursable benefits of installment savings, and distributions of earnings from money trusts that meet certain conditions are also protected in the same way as interest on deposits. While not protected by deposit insurance, when a financial institution continues its business opera-tions after failure, interest on deposits may be paid from the day after the day of failure (however, the interest rate may be reduced).

I. DIC

J’sO

perations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

III. Annex


6

deposits, the insurance premium rate has been calcu-lated to ensure that the insurance premium rate for each yen of insured deposits for the deposits for

payment and settlement purposes, and general depos-its, etc. are equal since FY2005, when the current framework of deposit protection was established.

(vi) Resolution of failed financial institutions, etc.If an insured financial institution has failed, the eligible deposits, etc. thereof are in principle protected within the scope of the protection prescribed (limited coverage). Provided that the Prime Minister recognizes that unless any measures against financial crises, such as full protection of the eligible deposits, etc., are taken, the maintenance of the stability of the financial system in Japan or in a certain region in Japan where the insured financial institution conducts its business could be severely hindered, measures against financial crises may be taken after deliberation by the Financial System Management Council. [See P5: I. 1. (3) (iv) concern-ing the scope of protection of deposits, etc., P10 –11: I. 1. (3) 2) concerning measures against financial crises and P124 –125: III. 1. (1) concerning the development of a failure resolution scheme.]

1) Failure resolution under limited coveragea. Insurable contingencyEvents that may lead to deposit insurance payouts (insurable contingency) are divided into two types: the suspension of the repayment of deposits, etc. by a financial institution (Category One Insurable Contingency); and the cancellation of a financial institution’s license to conduct business, a decision to commence bankruptcy proceedings and a resolu-tion to dissolve the financial institution (Category Two Insurable Contingency).

b. Method of protectionIf a Category One Insurable Contingency has occurred, the insured deposits are protected by either of the following two methods: the insurance payout method, whereby payouts are made to depositors; and the financial assistance method, whereby finan-cial assistance is provided to an assuming financial institution or other entity. The method to be adopted is decided by the Policy Board within one month of

Trend in the insurance premium ratesPremium rate Effective rate (Note 3)

From 1971 onward (when the system began) 0.006% 0.006%

From FY1982 onward 0.008% 0.008%

From FY1986 onward 0.012% 0.012%

From FY1996 onward 0.048%

0.084%

FY2001Specific deposits (Note 1) Other deposits, etc. (Note 1)

0.048% 0.048%

FY2002 0.094% 0.080%

From FY2003 onwardDeposit for payment and settlement purposes (Note 2) General deposits, etc. (Note 2)

0.090% 0.080%

FY2005 0.115% 0.083%

From FY2006 onward 0.110% 0.080%

FY2008 0.108% 0.081%

FY2009 0.107% 0.081%

From FY2010 onward 0.107% 0.082%

FY2012 (Note 4) 0.107% (0.089%) 0.082% (0.068%) 0.084% (0.070%)

Notes: 1. Specific deposits are current deposits, ordinary deposits and specified deposits, and other deposits, etc. are deposits other than specific deposits, such as time deposits.

2. Until FY2004, deposits for payment and settlement purposes were the same as specific deposits, and general deposits, etc. were the same as other deposits, etc. (specified settlement obligations as specified in Article 69-2, paragraph 1 of the Deposit Insurance Act were included in FY2004). From FY2005 onward, deposits for payment and settlement purposes comprised deposits meeting three requirements — bearing no interest, payable on demand, and capable of providing payment and settlement services — and specified settlement obligations, while general deposits, etc., comprised deposits, etc. other than deposits for payment and settlement purposes, such as time deposits.

3. Including the rate (0.036%) of the special insurance premium (provided for in Article 19, paragraph 1 of the Supplementary Provisions of the Deposit Insurance Act), which was in place between FY1996 and FY2001. The rate for FY2002 is the weighted average of the rates for specific deposits and other deposits, etc. and the rate for the period from FY2003 onward is the weighted average of the rates for deposits for payments and settlement purposes and general deposits, etc.

4. For FY2012, the premium rate and effective rate in the parentheses will be applied if there is neither (i) insurance contingency, (ii) order for a financial administrator to manage the business and properties of the failed financial institution, nor (iii) decision by the Prime Minister to take measures stipulated in Article 102, paragraph 1, item 2 or 3 of the Deposit Insurance Act during the fiscal year.


ICJ’s

Operations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

III. Annex

7

the occurrence of a Category One Insurable Contin-gency (if necessary, this period may be extended by up to one month). The Financial System Council has recommended that priority should be given to the financial assistance method to minimize any disorder that may accompany the failure of a financial institution.If a Category Two Insurable Contingency has occurred, the insurance payout method is adopted because the financial functions of a failed financial institution are not maintained in this case. Under the limited coverage scheme, uninsured deposits and other claims are reimbursed according to the state of assets of a failed financial institution. Therefore, it is necessary to preserve the assets by imposing certain restrictions on the operations of the failed financial institution, such as deposit repay-ment, in order to maintain the equality among depos-itors and general creditors and prevent an outflow of assets. For this reason, the legal bankruptcy proceed-ings are used for the resolution of failed financial institutions under the limited coverage scheme.

c. Protection based on the insurance payout method

In the case of protection based on the insurance payout method, the DICJ will make insurance payout to depositors upon their request after specifying the amount of insured deposits as of the date of the insurable contingency for each depositor based on data of depositors provided by the financial institu-tion where the insurable contingency has occurred. However, insurance payout regarding deposits pledged as security may be deferred until the right of pledge expires.There are two methods of making insurance payout: one is making payout directly to depositors, etc. and the other is placing deposits at insured financial institutions other than the failed financial institution and transferring them to depositors, etc. (the method of placing deposits).In the case of protection based on the insurance payout method, the DICJ determines, subject to a resolution by the Policy Board, the details of the insurance payout, such as the payout period, place, method, and processing time. It then places public notices in the Official Gazette and other publications to ensure that all depositors are aware of these details.

d. Protection based on the financial assistance method

In the case of protection based on the financial assis-tance method, the DICJ provides financial assistance to an assuming financial institution or other entity that takes over the insured deposits, etc. of a failed

financial institution by implementing a merger, business transfer (including partial transfer), transfer of the insured deposits, or the acquisition of shares of the failed financial institution (hereinafter referred to as a “merger, etc.”), in an amount up to the estimated cost that would be necessary if the insur-ance payout method was adopted (hereinafter referred to as “the insurance payout cost”) in response to an application from the assuming finan-cial institution for financial assistance.Financial assistance may take the form of a monetary grant, loan or deposit of funds, purchase of assets, guarantee of liabilities, assumption of financial obligations, subscription for preferred shares and other financial instruments, or loss sharing.In cases where an assuming financial institution undertakes the partial transfer of business or transfer of the insured deposits from a failed financial institu-tion, the DICJ may also provide financial assistance to the failed financial institution in the form of a monetary grant in order to secure the amount of funds necessary for the repayment of the remaining debts of the failed financial institution to the credi-tors so that the equal treatment of creditors (equitable financial assistance) is ensured. In the case of protection based on the financial assis-tance method, the DICJ, upon receiving an applica-tion for financial assistance made jointly by an assuming financial institution (it is necessary to receive authorization (Note) for the eligibility of the merger, etc. or a recommendation of the merger, etc. by the FSA Commissioner) and a failed financial institution, decides whether or not to provide the relevant financial assistance as well as the amount, method and other details if the decision in favor of the assistance is made. Then, the DICJ enters into a financial assistance agreement with the assuming financial institution and the failed institution. When making this decision, the Policy Board takes account of the financial condition of the DICJ, the estimated cost necessary for the financial assistance, and the insurance payout cost, and strives to ensure an efficient use of the DICJ’s assets.Note: Authorization for the eligibility may be granted only when

all of the following three requirements are satisfied:

1. The implementation of the merger, etc. must contribute to the protection of depositors and other creditors.

2. The financial assistance by the DICJ must be indispens-able to the facilitation of the merger, etc.

3. The merger, etc. must be such that, if it is not carried out and the failed financial institutions ceased all business or were dissolved, it could significantly hinder the smooth flow of funds and undermine the convenience of users within the region or sector in which the failed financial institution operates.

I. DIC

J’sO

perations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

III. Annex


8

e. Partial paymentsIf an insurable contingency has occurred, the DICJ may make a partial payment to depositors in anamount up to ¥600,000 per account against the balance of ordinary deposits (principal only).The DICJ makes partial payments to enable deposi-tors to cover their immediate living costs and other expenses when it is expected to take a considerable length of time before insurance payouts (in the case of protection based on the insurance payout method) or the repayment of insured deposits (in the case of protection based on the financial assis-tance method) start.The Policy Board of the DICJ decides whether or not to make partial payments within one week of the occurrence of the insurable contingency. When making partial payments, the Policy Board decides the details of the partial payment, such as its period, place, method, and processing time. As in the case of insurance payouts, the DICJ places public notices in the Official Gazette and other publications to ensure that all depositors are aware of these details. When insurance payout, etc., is made later, the amount of partial payment will be deducted from the amount of insurance payout, etc.

f. Purchase of deposits and other claimsIf an insurable contingency has occurred, uninsured deposits, etc. are repaid as bankruptcy dividends or reimbursement according to the state of the assets of the failed financial institution as part of the bankruptcy proceedings.The purchase of deposits and other claims represents a system for securing liquidity for depositors, etc. at an early date before the payment of bankruptcy dividends or reimbursement by the failed financial institution. The DICJ purchases deposits and other claims upon request by depositors by paying an amount (amount of the estimated proceeds payment) to those depositors calculated by multiplying the portion of the general deposits, etc. of each depositor that exceeds ¥10 million in principal and principals of foreign-currency deposits plus interest thereon (excluding deposits pledged as security) by a rate (the estimated proceeds payment rate) determined by the DICJ in light of the estimated amount of the bankruptcy dividend (the estimated proceeds payment) to be paid by the failed financial institution and other factors.When the amount of funds which the DICJ has received as bankruptcy dividends or reimbursement related to deposits and other claims purchased from depositors exceeds the total of the estimated proceeds payments and expenses incurred in purchasing deposits and other claims, the DICJ pays the surplus to depositors, etc. (final settlement payment).

The Policy Board of the DICJ determines whether or not to purchase deposits and other claims. After the Policy Board has determined the estimated proceeds payment rate, the DICJ obtains authorization for the rate from the FSA Commissioner and the Minister of Finance.If authorization for the purchase of deposits and other claims is granted, the Policy Board determines the purchase period, place, method of making the estimated proceeds payment, processing time and other details, and the DICJ places public notices in the Official Gazette and other publications. When making final settlement payments, the Policy Board determines the details of the final settlement payment, such as its amount, period and method, and the DICJ places public notices in the Official Gazette and other publications.

g. Representation of depositors in court procedures

Under the Act on Special Treatment of Corporate Reorganization Proceedings and Other Insolvency Proceedings of Financial Institutions (hereinafter referred to as the “Special Corporate Reorganization Act”), the DICJ participates in bankruptcy proceed-ings for failed financial institutions on behalf of depositors of eligible deposits and foreign currency deposits, in principle, in order to ensure the realiza-tion of depositors’ rights and to facilitate the bankruptcy proceedings.When participating in the bankruptcy proceedings on behalf of depositors, the DICJ assumes the fiduciary duty and the duty of due care of a prudent manager.


ICJ’s

Operations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

III. Annex

9

Conceptual diagram of the treatment of deposits, etc. in the case of the failure of a financial institution Scope of protection by the deposit insurance system

Type of deposit Insurable amount of depositScheduled starting date of

repaymentSites for repayment,

etc.

Eligible deposits

(Note 1)

<Deposits for payment and settlement purpose (Note 2) >• Ordinary deposits that bear no interest• Current deposits, etc.

Full amount

ProtectedTo be repaid as usual the following Monday and beyond (Note 3)

Deposit countersCD, ATMInternet

Receipt of salaries and pensions and automatic debit transfer can be made as usual.

<General deposits, etc.>• Interest-bearing ordinary deposits• Time deposits• Installment savings• Deposits at notice• Savings deposits• Deposits for preparation for taxes, etc.

Up to a total of ¥10 million in principal plus interest thereon

Portion in excess of ¥10 million To be paid

according to the state of the failed financial institution’s assets (subject to deduction)

Repayment will be suspended.

However, the following services will be available.(i) Offsetting of deposits

with loan and guarantee: To be available from the following Monday.

(ii) Payment of the estimated proceeds: To be available from dd/mm/yyyy.

Payment will be made about 1 year later.

A counter at the branch where the account was held.

Non-eligible deposits

• Foreign-currency deposits

Notes: 1. Deposits held in an account opened in the name of a person other than the actual depositor or under a fictitious name, made on the assump-tion of being relent to a third party, or held in an anonymous account, are not covered by the deposit insurance.

2. These are deposits satisfying the three requirements of bearing no interest, being payable on demand, and being capable for payment and settlement services. They are thus fully protected under law.

3. It may take some time for the reimbursement of depositor’s after an application for reimbursement in cases where it is impossible to ascer-tain that deposits are covered by insurance due to a deficiency in depositor’s name-based aggregation data, such as the address (including cases where the deposits are held in the name of a voluntary organization).

2) Measures against financial crisesa. OverviewProvided that the Prime Minister recognizes that unless one of the following measures against finan-cial crises is taken, the maintenance of the stability of the financial system in Japan or in a certain region

in Japan where the insured financial institution conducts its business could be severely hindered; measures against financial crises may be taken after deliberation by the Financial System Management Council.

Measures to be taken Insured financial institutions

i) Capital injection (Article 102 paragraph 1 (1) of the Deposit Insurance Act)

Financial institutions (excluding failed or insolvent financial institutions)

ii) Financial assistance whose amount exceeds the insurance payout cost (Article 102 paragraph 1 (2) of the Deposit Insurance Act)

Failed or insolvent financial institutions

iii) Special crisis management (Article 102 paragraph 1 (3) of the Deposit Insurance Act)

Failed financial institutions that are insolvent banks

I. DIC

J’sO

perations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

III. Annex


10

b. Capital injectionThe DICJ strengthens the capital base of insured financial institutions (excluding failed or insolvent ones) by subscribing for common shares, preferred shares or subordinated corporate bonds and other capital-raising instruments that they or their holding companies issue, based on the decision of the FSA Commissioner (Note) (subject to the consent of the Minister of Finance).The DICJ injected capital into Resona Bank, Ltd. in 2003 under the measures against financial crises. [See P56: II. 4. (2) (iii)]Note: In cases where the insured financial institutions are labor

banks or the Rokinren Bank, the decisions of the FSA Commissioner, and the Minister of Health, Labour and Welfare are required; in the case of the Shoko Chukin Bank, the decisions of the FSA Commissioner, the Minister of Finance, and the Minister of Economy, Trade and Indus-try are required.

c. Financial assistance whose amount exceeds the insurance payout cost

In cases where the insured financial institution is a failed or insolvent financial institution, the DICJ may provide financial assistance whose amount exceeds the insurance payout cost to an assuming financial institution involved in a merger, etc. This makes it possible to fully protect deposits and other claims.When this measure is taken, the FSA Commissioner issues an order for a financial administrator to manage the business and assets of the failed or insol-vent financial institution.

d. Special crisis managementSpecial crisis management may be implemented only in cases where the insured financial institution is a failed financial institution that is an insolvent bank and where it is recognized that even if financial assistance were provided in an amount exceeding the insurance payout cost, it would be impossible to maintain the stability of the financial system in Japan or in a certain region in Japan where the insured bank conducts its business.When special crisis management is implemented, the DICJ acquires the shares of the insured bank based on the decision of the FSA Commissioner, and appoints the directors, auditors and other officers of the bank as nominated by the FSA Commissioner.Moreover, the DICJ may implement financial assis-tance to an insured bank without taking into account the insurance payout cost. This enables full protec-tion of deposits and other claims. It is prescribed that special crisis management should be terminated as early as possible by implementing the merger, trans-fer of business, or disposal of shares.One of the measures taken by the DICJ in the past was in the case of the Ashikaga Bank, Ltd., for

which the recognized that special crisis management should be implemented upon deliberation by the Financial System Management Council held on November 29, 2003. Concurrently with such recog-nition, the FSA Commissioner decided that the shares of the Ashikaga Bank should be acquired. Following the public notice issued on December 1, 2003, the DICJ acquired the shares of the same bank. On July 1, 2008, the special crisis management of the Ashikaga Bank ended, as the DICJ transferred the Ashikaga Bank shares it had held to an assuming financial institution. Details of the business associ-ated with the special crisis management can also be viewed on the DICJ’s website (http://www.dic.go.jp/english/e_katsudo/e_hatanshori/).

e. Crisis Management Account and contributionsThe DICJ keeps the record of all the expenses for capital injection and the portion of financial assis-tance that is in excess of the insurance payout cost in the Crisis Management Account, rather than the General Account.It is prescribed that the deficit of the Crisis Manage-ment Account should be funded by contributions from financial institutions covered by the deposit insurance system. When the FSA Commissioner and the Minister of Finance recognize the need for such contributions, the insured financial institutions must make the contributions to the DICJ according to the contribution rate and the period for the payment of contribution determined by the FSA Commissioner and the Minister of Finance. The amount of contri-butions to be made by each insured financial institu-tion is calculated by multiplying the contribution rate by the amount of its debts (excluding some specified reserves) as of the end of the previous fiscal year.However, the government may subsidize some of the expenses incurred by the DICJ only when it is recog-nized that if the deficit of the Crises Management Account were funded by the contributions alone, the financial situation of insured financial institutions would deteriorate substantially and an extremely serious hindrance could be caused to the maintenance of the stability of the financial system in Japan.


ICJ’s

Operations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

III. Annex

11

Since the establishment of the deposit insurance system in 1971, the institutional framework and

scope of protection of the system have been expanded. [See P124: III. 1. (1)]

Column 2: History of the deposit insurance system

(Introduction of major systems, etc.)July 1986 Introduction of the financial assistance and partial payment

June 1996 Introduction of the insurance payout based on the method of placing deposits, and exceptional measures for full protection of deposits and other claims

April 1997 Introduction of the purchasing deposits and other claims, and representation of depositors in court procedures

April 2001 Introduction of measures against financial crises and introduction of the obligation for financial institutions to prepare depositor’s name-based aggregation databases and make necessary adjust-ments to computer systems

At the end of March 2002

Abolition of full protection of deposits, etc. except for specific deposits (current deposits, ordinary deposits and specified deposits) (Note 1)

Note 1: Full protection was provided to current deposits, ordinary deposits and specified deposits until the end of FY2002. (As these types of deposits were regarded as deposits for payment and settlement purposes, they were fully protected until the end of FY2004.)

April 2003 Introduction of full protection of deposits for payment and settlement purposes (Note 2) and settle-ment obligations Note 2: Deposits that satisfy three requirements — bearing no interest, payable on demand, and capable of providing

payment and settlement services

At the end of March 2005

Abolition of full protection of specific deposits (Deposits that meet the requirements for deposits for payment and settlement purposes have continued to be fully protected since April 2005.)

(Changes in the scope of deposits, etc., protection)From

July 1971From

June 1974From

July 1986From

June 1996From

April 2002From

April 2003From

April 2005

Current depositsOrdinary depositsSpecified deposits Up to

¥1 million in principal

Up to ¥3 million in principal

Up to ¥10 million in principal

Deposits for payment and settlement purposes

Fully protected

General deposits, etc.Time depositsInstallmentsavings, etc.

Up to a total of ¥10 million in principal plus interest thereon payable until the day of the failure, etc.

I. DIC

J’sO

perations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

III. Annex


12

(4) Operations of the Financial Administrator

The resolution of the failed financial institution begins when the FSA Commissioner, based on the recognition of such situations as an excess of liabilities over assets, issues “an order for a financial administrator to manage the business and assets of the failed financial institution” (hereinafter referred to as “the order for management”). When the FSA Commissioner issues the order for management, they appoint the financial administrator in charge of managing the failed financial institution at the same time. While the financial administrators have been selected among lawyers, certified public accountants or people well-versed in financial practices, the DICJ itself, which has accumulated experience concerning the resolution of the failure of financial institutions, may also be chosen to serve as a financial administrator. In fact, the DICJ has thus far been appointed as the financial administrator in a total of 12 cases of failure resolution.Immediately after the issuance of the “order for manage-ment,” the financial administrator visits the failed finan-cial institution to prepare for the resumption of operations, and manages and disposes of its assets. The financial administrator, upon the request of the FSA Commissioner, also prepares a report on the status of the business and assets of the failed financial institution, draws up a management plan and works to provisionally continue the business of the failed financial institution. At the same time, the financial administrator seeks the swift transfer of the business of the failed financial institution to an assuming financial institution and also files civil suits and/or criminal accusations in order to make clear the responsibility of former management for the business failure. As described above, the tasks that are to be undertaken by the financial administrator are quite diverse.With regard to the resolution of the Incubator Bank of Japan, Limited (hereinafter referred to as the “Incubator Bank”), which received the “order for management” on September 10, 2010, the DICJ was appointed as its finan-cial administrator to implement the resolution. In FY2011, on April 25, 2011, some business operations of the failed bank were transferred to the Second Bridge Bank of Japan, Ltd., (hereinafter referred to as “the 2nd BBJ”). On September 30, 2011, the DICJ announced that it selected AEON Bank, Ltd., (hereinafter referred to as the “AEON Bank”) as the final assuming financial insti-tution for the Incubator Bank, completing the business management of the 2nd BBJ by transferring all the 2nd BBJ shares outstanding to AEON Bank on December 26.Since April 2012, the DICJ has reimbursed holders of rehabilitation claims, including those of uninsured depos-itors under the civil rehabilitation plan, and final settle-ment payment to depositors who receive estimated proceeds payment of uninsured deposits. [For details of

the operations of financial administrator for the Incubator Bank, See P41: II. 2. (6)]


ICJ’s

Operations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

III. Annex

13

(1) Establishment

The DICJ is a semi-governmental organization that was established in 1971 for the purpose of operating Japan’s deposit insurance system under the Deposit Insurance Act.As for the background of the DICJ’s establishment, the concept of a deposit insurance system was taken up in a report on the policy of private financial institutions submitted by the Financial System Research Committee in July 1970. The report stressed the need to create a deposit insurance system from the perspective of protect-ing depositors and indicated a basic direction of the system. Based on this policy, the Deposit Insurance Act was enacted in March 1971 (promulgated and put into effect on April 1 of the same year). The DICJ was estab-lished on July 1, 1971, with funding from the government, the Bank of Japan, and private financial institutions.The DICJ was initially capitalized at ¥450 million (with funding of ¥150 million each from the government, the Bank of Japan, and private financial institutions). The participation of labor banks in the deposit insurance system in July 1986 added ¥5 million to the DICJ’s capital. The DICJ’s capital amount now stands at ¥34.135 billion (as of July 1, 2012) following additional funding of ¥5 billion for the Account for Disposal of Claims and Debts of Specific Jusen Companies (herein-after referred to as the “Jusen Account”) in July 1996, and ¥10 billion for the Enterprise Turnaround Initiative Account (¥5 billion in each of October and December 2009), both from the government, and further investment of ¥18.680 billion from the government in February 2012 in the Account for Revitalizing Earthquake-Affected Business.

(2) Organization

(i) Policy BoardThe Policy Board functions as a decision-making body that passes resolutions on important matters regarding the management of the DICJ. It consists of a maximum of 8 Board Members in addition to the Governor and Deputy Governors of the DICJ. Board Members are appointed by the Governor of the DICJ from among persons with experience and expert knowledge concerning financial affairs. All appoint-ments must be approved by the FSA Commissioner and the Minister of Finance. At present, there are 8 Policy Board members: 5 representatives of the financial community and 3 members from outside the financial community.According to the Articles of Incorporation, a resolu-tion by the Policy Board is required for such matters as: 1) amendments to the Articles of Incorporation; 2) preparation of and amendments to the Operational Guidelines; 3) budget and funding plans; 4) settle-ment of accounts; 5) decisions on and changes to the insurance premium rates; 6) decisions on the reimbursement of deposit insurance and partial payments thereof; 7) decisions on financial assis-tance; and 8) decisions on the purchase of deposits and other claims. In FY2011, the Policy Board met 12 times.

2. DICJ’s Structure and Organization

The Policy Board meeting

I. DIC

J’sO

perations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

III. Annex


14

Policy Board Members and the DICJ Executives (as of July 25, 2012)

Chairman: Masanori Tanabe (Governor of the DICJ)Members (in Japanese alphabetical order): Yoshiyuki Izawa (President, Japan Post Bank Co., Ltd.) Koji Omae (Chairman, the National Association of Shinkin Banks) Kunitaro Kitamura (Chairman, Trust Companies Association of Japan) Hidetoshi Sakuma (Chairman, The Regional Banks Association of Japan) Yasuhiro Sato (Chairman, Japanese Bankers Association) Fumio Muraoka (Director, Chairman of the Audit Committee, Toshiba Corporation) Shinji Yamada (News Commentator, Japan Broadcasting Corporation, NHK) Naoyuki Yoshino (Professor of Economics, Keio University)Deputy Governors: Toshihiko Niibori, Yoshiaki Inoue, Ikuo Gunji, Hiroyuki Obata<Executives of the DICJ> Governor: Masanori Tanabe Deputy Governors: Toshihiko Niibori, Yoshiaki Inoue Ikuo Gunji, Hiroyuki Obata Auditor (Part-Time): Sayoko Iida<Department Heads of the DICJ> Planning and Coordination Department: Masaki Sakamoto Treasury Department: Hitoshi Hatta Financial Reconstruction Department: Kazuo Katayama Deposit Insurance Department: Ryuichi Shogan Special Investigation Department: Hiroshi Sawada Inspection Department: Atsushi Nakayama Osaka Operation Department: Takashi Mieno Legal Affairs Department: Noritaka Muramatsu Audit Department: Hideaki Aso Executive Advisor to the Governor: Kazuya Nishihata

(ii) Operations of departments1) Planning and Coordination DepartmentThe Planning and Coordination Department is in charge of overall coordination of the DICJ’s admin-istrative works, convening of the Policy Board and other meetings, public relations, information disclo-sure, protection of personal information, personnel affairs, organization, recruitment, guidance and advice to or liaison with the RCC, capital injection to Enterprise Turnaround Initiative Corporation of Japan and others, planning for international affairs, research on deposit insurance systems at home and abroad, overall coordination of the DICJ’s informa-tion systems, purchase of specified difficult recovery claims, and other administrative work not handled by other departments.This department consists of 6 divisions and 3 offices: the Administration Division, the Personnel Division, the Public Relations and Information Management Office, the Planning and Coordination Division, the Subsidiary Administration Division, the Office for International Affairs, the Office for Research and Intelligence, the Information System Planning Division, and the Specified Difficult Recovery Claims Division.

2) Treasury DepartmentThe Treasury Department is responsible for budget-ing, settlement, accounting, asset management, financial planning, fund raising and management, the collection of insurance premiums, public notices made under the Criminal Accounts Damage Recov-ery Act, and so on. This department consists of 7 divisions: the Finan-cial Planning and Coordination Division, Budget and Accounting Division I, Budget and Accounting Division II, Budget and Accounting Division III, Finance Division I, Finance Division II, and the Bank Transfer Fraud Recovery Division.

3) Financial Reconstruction DepartmentThe Financial Reconstruction Department is in charge of work related to financial administrators, the transfer of business of failed financial institu-tions, responses to financial crises, special public management of banks, asset purchases from and capital injection into financial institutions, as well as corporate revitalization.This department consists of 3 divisions: the Planning and Coordination Division, the Capital Operation Division, and the Financial Reorganization Division.


ICJ’s

Operations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

III. Annex

15

4) Deposit Insurance DepartmentThe Deposit Insurance Department is in charge of work related to the execution of insurance claims and other payments, financial assistance (including responses to financial crises), purchase of deposits and other claims, support and advice to development and operation of the DICJ’s information systems, development and operation of the DICJ’s failure resolution system, training of and advice to financial institutions regarding the systems and database for their failure resolution, including depositors’ name-based aggregation and mixed account separation, and the preparation of schedule of depositors in line with the Special Corporate Reorganization Act.This department consists of 4 divisions: the Planning Division, the Financial Assistance Division, the Advisory Service Division, and the Information System Division.

5) Special Investigation DepartmentThe Special Investigation Department is in charge of such work associated with claim collection entrusted by the RCC, the management, collection and disposal of purchased assets, guidance and advice to the RCC, the investigation of assets of debtors and others regarding claims transferred to the RCC.This department has 4 divisions: Investigation and Planning Division, Investigation and Recovery Division, Special Investigation Division I and Special Investigation Division II.

6) Inspection DepartmentThe Inspection Department is in charge of inspec-tions and verifications pursuant to Article 137 paragraph 6 of the Deposit Insurance Act and Article 36 paragraph 6 of the Act on Damage Recovery Benefit Distributed from Fund in Bank Accounts Used for Crimes, and the collection, organization and analysis of a broad range of information related to the inspections and verifications.This department has 5 divisions: the Inspection Planning Division, the Monitoring and Analysis Division, the Evaluation Division, Inspection Division I, and Inspection Division II.

7) Osaka Operation DepartmentThe Osaka Operation Department is in charge of the following tasks mainly in the Kansai region and further west: work related to the reimbursement of deposit insurance and other payments, financial assistance (including responses to financial crises), purchase etc. of deposits and other claims, financial administrators, pursuit of liabilities of the managers of failed financial institutions, guidance and advice to the RCC, and investigation of the assets of debtors and others regarding claims transferred to the RCC,

claim collection entrusted by RCC, and the manage-ment, collection and disposal of purchased assets.This department has 4 divisions and 1 office: the Administration, Policy Planning and Coordination Division, the Financial Reorganization Office, the Financial Assistance Division, the Investigation and Recovery Division, and the Special Investigation Division.

8) Legal Affairs DepartmentThe Legal Affairs Department is in charge of dealing with legal cases related to the operational activities of the DICJ and overseeing the compliance activities of the DICJ.

9) Audit DepartmentThe Audit Department is responsible for the admin-istration of internal audits, overseeing external audit-ing, and administration relating to inspections by the Board of Audit of Japan, etc.

(iii) Other committees, etc.1) Liability Investigation CommitteeAs a result of the amendment of the Deposit Insur-ance Act in February 1998, it was prescribed that the Governor of the DICJ should strive to improve the organizational structure of the DICJ so as to effec-tively implement operations regarding the resolution of failures and the collection of assets, and the legal requirement for the pursuit of liability was strengthened.In response to this, the Liability Investigation Committee, which is chaired by the Governor of the DICJ and which comprises DICJ executives appointed by the Governor as its members, was established in February of the same year. It is in charge of clarifying the civil and criminal liability of debtors, executives, etc. of failed financial institu-tions, former Jusen companies and other entities in order to properly implement measures as bringing criminal accusations and making compensation claims. This committee did not meet in FY2011.Meanwhile, 4 outside experts currently serve as special advisers to the Liability Investigation Committee and express opinions as to how to appro-priately implement the above measures. The special advisors met once in FY2011.

<Special Advisors to the Liability Investigation Committee (as of July 1, 2012)>Kiyoshi Uetani (former President of the Osaka High Court)Kunihiro Matsuo (former Prosecutor General)Toru Motobayashi (former President of the Japan Federation of Bar Associations)Hiroto Yoshimura (former Director-General of the National Police Agency)

I. DIC

J’sO

perations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

III. Annex


16

2) Divestment Examination Board for Preferred Shares and other Capital-Raising Instruments

The Divestment Price Examination Board was estab-lished as the Governor’s advisory committee in June 2004 for the purpose of determining appropriate prices through fair and neutral procedures when preferred shares and other capital-raising instruments for which the DICJ subscribed in order to make capital injections using public funds are disposed of.On February 23, 2006, the Board revised its name to the Divestment Examination Board for Preferred Shares and other Capital-Raising Instruments and added execution of divestment, method of divest-ment, and amount of divestment to the subjects of its examination in order to deal with cases where appli-cations for divestment from financial institutions are not expected. This step was taken in line with the “Immediate Guideline for Disposal of Preferred Shares and other Capital-Raising Instruments Acquired through Capital Injection,” announced on October 28, 2005. The Board did not meet in FY2011.

<Members of the Divestment Examination Board for Preferred Shares and other Capital-Raising Instruments (as of July 1, 2012)>Chairman: Satoshi Komiyama (Certified public accountant)Deputy Chairman: Yasuyuki Kuratsu (Financial practitioner)Member: Hidetaka Kawakita (Academic expert)

3) Performance Appraisal CommitteeThe Performance Appraisal Committee was estab-lished in April 2004 in order to decide the rate of contribution to the DICJ performance for the purpose of making fair and reasonable payment of retirement allowance to DICJ executives. The Performance Appraisal Committee is composed of 3 members of the Policy Board (excluding members from the financial industry) and 1 part-time auditor. This committee met once in FY2011.

<Members of the Performance Appraisal Committee (as of July 1, 2012)>Chairman: Naoyuki Yoshino (Policy Board member)Members: Shinji Yamada (Policy Board member)

Fumio Muraoka (Policy Board member) Sayoko Iida (DICJ auditor)

4) Committee for Screening Purchase of Specified Difficult Recovery Claims

The DICJ established the Committee for Screening Purchase of Specified Difficult Recovery Claims in October 2011 for the purpose of deliberating the appropriateness of purchasing specified difficult recovery claims and the purchase price, which contribute to determination of the appropriateness of purchase by proper procedures and the purchase price in the case where the DICJ intends to purchase such specified difficult recovery claims. The Committee comprises 3 third-parties, including an attorney at law, a certified real estate appraiser from the perspective that the member shall deliberate the appropriateness of the specified difficult recovery claims and the purchase price. The Committee did not meet in FY2011.Names of the Committee members are not disclosed, taking the task into consideration.


ICJ’s

Operations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

III. Annex

17

Administration Division

Personnel Division

Public Relations and Information Management Office

Planning and Coordination Division

Subsidiary Administration Division

Office for International Affairs

Office for Research and Intelligence

Information System Planning Division

Specified Difficult Recovery Claims Division

Planning and Coordination Department

Liability InvestigationCommittee

Policy Board

Performance Appraisal Committee

Committee for Screening Purchase ofSpecified Difficult Recovery Claims

Divestment ExaminationBoard for Preferred Shares, etc.

Auditor (part-time) Deputy Governor Deputy Governor

Planning and Coordination Division

Capital Operation Division

Financial Reorganization Division

Financial Reconstruction Department

Planning Division

Financial Assistance Division

Advisory Service Division

Information System Division

Deposit Insurance Department

Investigation and Planning Division

Investigation and Recovery Division

Special Investigation Division I

Special Investigation Division II

Special Investigation Department

Financial Planning and Coordination Division

Budget and Accounting Division I

Budget and Accounting Division II

Budget and Accounting Division III

Finance Division I

Finance Division II

Bank Transfer Fraud Recovery Division

Treasury Department

Administration, Policy Planning and Coordination Division

Financial Reorganization Office

Financial Assistance Division


Special Investigation Division

Osaka Operation Department

Legal Affairs Department

Governor

DICJ

Deputy Governor Deputy Governor

Audit Department

Inspection Department Inspection Planning Division

Monitoring and Analysis Division

Evaluation Division

Inspection Division I

Inspection Division II

Organizational chart (as of July 1, 2012)

I. DIC

J’sO

perations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

III. Annex


18

Changes in the authorized number of staff members, by working role, at the DICJ

Fiscal year

Executives Staff membersIncrease/decrease compared with

previous fiscal yearGovernorDeputy

governorAuditor Total

Secretariat of the

committee

Depart-ment head

Deputy head

Division head

Manager, etc.

Total

Established in July 1971

(1) 1 (1) 1 1 — — — 10 11 —

1975 (1) 1 (1) 1 1 — 2 — 7 10 -1

1976 (1) 1 (1) 1 1 — 2 — 7 10 0

1977 (1) 1 (1) 1 1 — 4 — 7 12 2

1978 (1) 1 (1) 1 1 — 4 — 7 12 0

1979 (1) 1 (1) 1 1 — 4 — 7 12 0

1980 (1) 1 (1) 1 1 — 4 — 7 12 0

1981 (1) 1 (1) 1 1 — 4 — 7 12 0

1982 (1) 1 (1) 1 1 — 4 — 7 12 0

1983 (1) 1 (1) 1 1 — 4 — 7 12 0

1984 (1) 1 (1) 1 1 — 4 — 7 12 0

1985 (1) 1 (1) 1 1 — 4 — 8 13 1

1986 (1) 1 (1) 1 1 — 4 — 8 13 0

1987 (1) 1 (1) 1 1 — 4 — 9 14 1

1988 (1) 1 (1) 1 1 — 4 — 9 14 0

1989 (1) 1 (1) 1 1 — 4 — 9 14 0

1990 (1) 1 (1) 1 1 — 4 — 9 14 0

1991 (1) 1 (1) 1 1 — 4 — 9 14 0

1992 (1) 1 (1) 1 1 — 4 — 10 15 1

1993 (1) 1 (1) 1 1 — 4 — 10 15 0

1994 (1) 1 (1) 1 1 — 4 — 9 14 -1

1995 (1) 1 (1) 1 1 — 4 — 10 15 1

1996 1 3 (1) 4 — 4 11 10 94 119 107

1997 1 3 (1) 4 — 7 11 14 155 187 68

1998 Initial 1 3 (1) 4 — 8 14 27 239 288 101

After change 1 4 (1) 5 — 10 16 29 278 333 147

1999 1 4 (1) 5 — 11 16 31 275 333 0

2000 1 4 (1) 5 — 11 16 34 292 353 20

2001 1 4 (1) 5 — 11 16 34 320 381 28

2002 1 4 (1) 5 — 13 16 34 346 409 28

2003 1 4 (1) 5 — 13 17 37 331 398 -11

2004 1 4 (1) 5 — 14 16 39 328 397 -1

2005 1 4 (1) 5 — 14 16 38 318 386 -11

2006 1 4 (1) 5 — 14 16 38 305 373 -13

2007 1 4 (1) 5 — 14 16 36 297 363 -10

2008 1 4 (1) 5 — 14 16 37 293 360 -3

2009 1 4 (1) 5 — 14 16 37 294 361 1

2010 1 4 (1) 5 — 14 16 37 292 359 -2

2011 1 4 (1) 5 — 14 16 37 299 366 7

2012 1 4 (1) 5 — 15 16 37 298 366 0

Notes: 1. Figures with ( ) represent part-time workers.

2. Department head includes Chief Legal Officer, the Chief Audit Officer, Executive Directors, while Division Head includes Office Head, and Manager, etc. includes the Deputy General Counsels, Senior Managers, and division staff.


ICJ’s

Operations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

III. Annex

19

(3) Subsidiaries of the DICJ

(i) The Resolution and Collection Corporation (RCC)Following amendments to the Deposit Insurance Act and the Act on Special Measures concerning Promo-tion of Disposal of Claims and Debts of Specific Jusen Companies (hereinafter referred to as the “Jusen Act”) in October 1998, the RCC was estab-lished as a wholly owned subsidiary (limited company) of the DICJ (with capital of ¥212 billion) through a merger between the Housing Loan Admin-istration Corporation (hereinafter referred to as “HLAC”) and the Resolution and Collection Bank (hereinafter referred to as “RCB”) on April 1, 1999. Its purpose was to achieve quick and efficient collec-tion of nonperforming loans using fair and transparent means and to minimize the amount of public funds.As of July 1, 2012, the RCC had 7 officers (4 direc-tors and 3 auditors) and 402 employees (including 4 operating officers). As for its organization, in addition to its headquarters’ functions, it also has 2 collection offices: one in Tokyo and the other in Osaka.The main business of the RCC includes: 1) Recovery of loan assets, etc. transferred from 7

former Jusen companies as prescribed in the Jusen Act;

2) Purchase and collection of non-performing loans, etc. from failed financial institutions;

3) Purchase and collection of non-performing loans from sound financial institutions and other entities in line with Article 53 of the Act on Emergency Measures for the Revitalization of the Financial Functions (hereinafter referred to as the “Financial Revitalization Act”) (the receipt of applications for the purchase of assets closed on March 31, 2005);

4) Subscription for shares, etc. for the purpose of capital injections under the Financial Functions Strengthening Act.

Furthermore, following the enforcement of the revised Deposit Insurance Act in October 2011, the functions of bridge bank for facilitating failure resolution procedures and the purchase and recovery functions of specified difficult recovery claims held by financial institutions [See P38: II. 2. (3)] were newly added.

(ii) Enterprise Turnaround Initiative Corporation of Japan (ETIC)Enterprise Turnaround Initiative Corporation of Japan (hereinafter referred to as the “ETIC”) was established on October 14, 2009, with its initial capital fully funded by the DICJ. It is designed to work with financial institutions, local governments,

and other entities and to support the business turnaround of middle-ranking enterprises and small and medium-size enterprises that are saddled with excessive debt despite their revitalization potential, through such measures as purchasing debt held by financial institutions and other entities against such companies. This organization has been in place to revitalize local economies by strengthening the overall economic power of regions and to enhance the foundation of local financial systems, while giving consideration to the stabilization of employ-ment. (Present capital stands at ¥20.1298 billion, consisting of investments of ¥19.6298 billion by the DICJ and ¥0.5 billion by the Norinchukin Bank.)The ETIC engages in the following operations in accordance with Article 22 of the Act on Enterprise Turnaround Initiative Corporation: 1) Purchasing debt held by financial institutions and

other entities against support recipient companies;2) Lending funds, guaranteeing loans from financial

institutions, and providing capital to eligible businesses;

3) Dispatching business turnaround experts; 4) Offering suggestions related to business

operations.In specific, it deals with cases submitted by business owners, their main financial banks, and other entities, verifies them in line with legally prescribed criteria for support and procedures, and makes a final decision at the Enterprise Turnaround Initiative Committee on providing support or purchasing debt after consulting with the competent minister and other relevant parties.Following the revision of the Act on Enterprise Turnaround Initiative Corporation effective March 2012, the deadline for the financial assistance decision for target business operators was extended from October 14, 2011 (April 14, 2012 for business operators who received approval from the competent minister) to March 31, 2013 (September 30, 2013 for business operators who received approval from the competent minister), along with the expiry date of the financial assistance, extended from October 14, 2014 to March 31, 2016.

(iii) Corporation for Revitalizing Earthquake-Affected BusinessCorporation for Revitalizing Earthquake-Affected Business (hereinafter, referred to as “Corporation for Revitalizing Business”) was established on February 22, 2012 with investments by the DICJ, and the Agricultural and Fishery Co-operative Savings Insur-ance Corporation (hereinafter referred to as AFCSIC) with the aim of supporting revitalization of quake-affected business operators with excess debts and alleviating the debt burdens of such business opera-

I. DIC

J’sO

perations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

III. Annex


20

tors who intend to rebuild their businesses in quake-hit areas by purchasing the claims held by financial institutions etc. and other measures. These measures are expected to contribute to the maintenance of economic activities and reconstruction of the quake-hit areas in cooperation with financial institutions and municipal governments, etc. by preventing the industries and the population in the affected areas from fleeing said areas. Subsequently, as the DICJ subscribed to the newly issued shares, the capital of the Corporation for Revitalizing Business increased to ¥19.982 billion (¥18.668 billion from the DICJ and ¥1.314 billion from AFCSIC). Corporation for Revitalizing Business engages in the following operations in accordance with Article 16 of the Act on Corporation for Revitalizing Earth-quake-Affected Business (hereinafter referred to as

“Act on Corporation for Revitalizing Business”):1) Purchasing debt held by financial institutions and

other entities against support recipient companies;2) Lending funds, guaranteeing loans from financial

institutions, and providing capital to eligible businesses;

3) Dispatching business turnaround experts; 4) Offering suggestions related to business

operations.The period for the financial assistance decision for the target business operators by Corporation for Revitalizing Business is within 5 years (extendible by 1 additional year) from the date of its establish-ment (February 22, 2012) while the period for assis-tance is not more than 15 years from the date of determination of assistance.

The Second Bridge Bank of Japan (hereinafter referred to as the “2nd BBJ”), was established as a 100% subsidiary of the DICJ (with a capital of ¥2.12 billion) based on approval on February 26, 2004, by the FSA Commissioner, and it acquired banking license for banking and secured mortgage bond trust businesses on March 8, 2004.The 2nd BBJ is intended to temporarily inherit the continuation of the operations of a failed financial institution by taking over its insured deposits and sound assets that have been placed under the manage-ment of financial administrators in cases where no financial institution takes over its operations. It also aims to protect depositors and the stability of the

financial system until a final assuming financial insti-tution willing to take over those operations (a reassuming financial institution) starts operations.The transfer of some business operations from the Incubator Bank was completed on April 25, 2011. On September 30, 2011, it was announced that AEON Bank was selected as the final assuming financial institution for the Incubator Bank. Furthermore, all the shares outstanding of the 2nd BBJ were trans-ferred to AEON Bank, and the DICJ completed the business management of the 2nd BBJ on December 26. [See P44: II. 2. (6) (v) ]The Bridge Bank of Japan, which was established in March 2002, was dissolved in March 2004.

Column 3: About the Second Bridge Bank of Japan


ICJ’s

Operations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

III. Annex

21


22

1. Improvement and Enhancement of the Failure Resolution Framework of Financial Institutions from the Perspective of Depositor Protection

(1) Preparations, Training, etc. for Failure Resolution under Limited Coverage(2) Promoting Maintenance of Depositor’s Name-based Aggregation Database and Improvement of the System(3) On-site Inspections(4) Collaboration among Persons Undertaking On-site Inspections, System Verification and Training/Advice

2. Proper and Steady Operations Related to Failure Resolution and Asset Holdings

(1) Implementation of Financial Assistance etc. and Collection of Assets(2) Management and Disposal of Assets Purchased from Failed Financial Institutions(3) Purchase/Collection of Specified Difficult Recovery Claims(4) Operations Related to Banks under Special Public Management(5) Management and Disposal of Assets Purchased from Sound Financial Institutions(6) Operations Related to the Resolution of the Failure of the Incubator Bank

3. Supporting Resolution and Collection Operations and Proper Implementation of Pursuit of Liability

(1) Asset Investigation(2) Support for Collection Operations in Difficult Recovery Cases(3) Pursuit of Civil Liability(4) Pursuit of Criminal Liability

4. Operations Related to Capital Injection

(1) Operations Related to Capital Injection(2) Capital Injection and Disposal under Relevant Acts

5. Proper Implementation of Operations Related to Procedures for Criminal Accounts Damages Recovery

(1) Posting of Public Notices by the DICJ(2) Three Main Public Notices Posted in FY2011(3) System of Money Transfers from Financial Institutions to the DICJ and the Use of Transferred Money(4) Status of the Utilization of Public Notices

6. PR Activities to Ensure Public Awareness of the Deposit Insurance System and the DICJ’s Operations

(1) PR Activities Utilizing Various Media(2) Response to Inquiries

7. Promotion of Efforts to Ensure Sound and Efficient Finances

(1) Financial Conditions(2) Funding and Investment (Fund Management)(3) Deposit Insurance Premium Rates

8. International Cooperation and Research & Study Activities Regarding Deposit Insurance

(1) International Cooperation(2) Research & Study Activities

9. Preparation and Announcement of the Medium-Term Goals, Operational Policy and Performance Evaluation

II. Overview of the DICJ’s Activities

III. Annex

23

II. Overview of the DICJ’s ActivitiesI. D

ICJ’s

Operations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Policy of

Operation

(1) Preparations, Training, etc. for Failure Resolution under Limited Coverage

The DICJ has been studying failure resolution schemes under limited coverage and, in anticipation of its possible appointment as financial administrator, keeps itself ready to take administrative procedures for failure resolution. The DICJ continuously reviews the administrative proce-dures based on its past experiences of failure resolution in order to make a more appropriate and reasonable resolution of failures. Specifically, the DICJ assumes that it will take the following administrative procedures, for example, when the financial assistance method is adopted:

(i) As failures of financial institutions occurred on a weekend in many past cases, the DICJ assumes that a financial institution is most likely to fail on Friday and that as soon as the FSA Commissioner issues the order for management of the failed financial institu-tion, the DICJ will be appointed as the financial administrator;

(ii) The failed financial institution will file a court appli-cation to commence civil rehabilitation proceedings and make preparations to resume operations the following Monday. The main operations to be resumed are as follows:• Identifying the insured deposits through name-

based aggregation of deposits;• Preparing to reimburse insured deposits;• Preparing for special operations such as responses

to depositors’ requests for the offsetting of depos-its against loans; and

• Keeping employees of the failed financial institu-tion informed of how business operations should be conducted in the future;

(iii) The financial administrator will proactively conduct public relations activities and resume the reimburse-ment of insured deposits, payment and settlement services and lending operations from the following Monday in order to prevent confusion at bank counters;

(iv) The DICJ aims to immediately purchase deposits and other claims based on estimated proceeds payment;

(v) When approximately 6 months have passed since its failure, business transfer (i.e. transfer of insured deposits, sound loan assets, etc.) will be done to a bridge bank,(Note) which temporarily succeeds opera-tions. The DICJ offers financial assistance within the insurance payout cost business at the time of business transfer.

(vi) Reimbursement of residual assets of failed financial institutions will be started based on their rehabilita-tion plan by around 1 year after its failure; and

(vii) The bridge bank will retransfer the business to a final assuming financial institution within 2 years (the period may be extended to 3 years in cases where there is a compelling reason) from the date of the order for management.Note: Due to revision of the Deposit Insurance Act (enforced on

October 29, 2011), in addition to the conventional bridge bank system, it became possible to establish a new account (Bridge Bank Account) to take over normal assets and insured deposits from each failed financial institution in the contracted bank (the RCC) so that they can take over the operations of failed financial institutions in order to make a more flexible and efficient resolution of financial institu-tion failures possible. In the future, the DICJ will make failure resolution utilizing the RCC’s bridge bank function a principle in the event of failure of a financial institution.

The DICJ also conducts periodic practical training concerning failure resolution procedures in order to ensure appropriate failure resolution by properly imple-menting the prepared failure resolution procedures. In addition, based on its past experiences of failure resolu-tion, the DICJ continuously reviews the procedures to make a more appropriate and effective resolution of financial institution failures possible. This practical train-ing is intended as preparation for the failure of individual financial institutions that may occur in the future; it does not assume the failure of any specific financial institution.The DICJ is currently engaged in the procedures for the Incubator Bank, which failed as of September 10, 2010, based on processes we learned through training, enabling a smooth resolution.

1. Improvement and Enhancement of the Failure Resolution Framework of Financial Institutions from the Perspective of Depositor Protection

III. Annex


24

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

I. DIC

J’sO

perations

Failure of financial institution

FS CA ourt

DIC

J

Depositors

Order for managementAppointment of financial administrator

Decision to start civil rehabilitation procedures, supervision of the implementation revitalization plan by supervisors, etc.

Failed financial institution

Financial Administrator

• Executes the operations of a financial institution

• Transfers the business

• Pursues the liability of former management executives

Assumable asset Insured deposits

Non-performingassets

Uninsured deposits, ordinary claims, etc.

Disposal of assets (Note 1)

RCC

Executes operations as financial administrator if appointed as such

Loans and financial assistance

Provides loans for asset purchase, compensates losses, provides guidance and assistance for collection

Financialassistance, etc.

Business transfer

RCC or bridge bank

Re-assumingfinancialinstitution

Transfers the business tothe re-assuming financialinstitution within 2 years(maximum of 3 years), etc.

Reim

burses deposits etc. based on the amount and type of

the failed financial institution’s assets Ordinary creditors

(Uninsured deposits)

Protection (repayment upon request)

(Insured deposits)

Collects and disposes of assets

Failure resolution scheme under limited coverage (Outline of an example of financial assistance)

(Note 2)

Notes: 1. The disposal of assets through a bidding system is also to be considered.

2. According the amendment of Deposit Insurance Act, RCC is eligible to be as signed as Bridge Bank.

III. Annex

25

II. Overview of the DICJ’s ActivitiesII. O

verview

of the DIC

J’s A

ctivities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

I. DIC

J’sO

perations

Previously, the Deposit Insurance Act required finan-cial institutions to take (i) measures to maintain depositor data necessary for the name-based aggrega-tion of deposits and promptly submit such data to the DICJ in the event of failure, and (ii) measures for the smooth repayment of deposits for payment and settle-ment purposes. Due to the revision of the Deposit Insurance Act that aims at the smooth repayment of deposits in the event of failure, however, financial institutions are required to incorporate the preparation for repayment procedure (compiling manuals etc.) on a steady basis.Specifically, with regard to the above (ii), financial institutions are required to take the following measures in accordance with the revision of the Deposit Insurance Act (Article 58-3) in 2011 and the revision of the Ordinance of the Cabinet Office in October 2011 in order to smoothly make payment of deposits, which include not only deposits for repay-ment and settlement purposes but also general depos-its, etc., and also deal with other insurable contingencies (enforced on May 19, 2012).

(i) Financial institutions must have preparedness (the preparation of relevant manuals, etc.) to promptly separate (Note) the insured deposit portion (reimbursable) and the uninsured deposit portion (non-reimbursable).Note: For example, financial institutions must divide a mixed

account into an insured deposit portion and an uninsured deposit portion and enable the repayment of only the insured deposit portion by inhibiting repay-ment of the uninsured deposit portion (with the estab-lishment of caution codes, etc.). In particular, it is necessary to make the insured portion of ordinary deposits reimbursable over the counter and/or through an ATM and also make the insured portion available for automatic transfer for utility charges and salary payment, etc.

(ii) In order to ensure smooth civil rehabilitation proceedings, etc., financial institutions must have preparedness (system development, etc.) to submit data on deposits and withdrawals of deposits after failure to the DICJ by designated data format so that the DICJ can separately identify and manage deposits prior to the failure (rehabilitaion claim) and deposits after the failure (common benefit claim).

(iii) Financial institutions must have preparedness (the preparation of relevant manuals, etc.) to smoothly carry out the offsetting of deposits and loans and estimated proceeds payment of uninsured deposits, etc.

Financial institutions are required to prepare manuals, etc. (when system responses are needed, financial institutions must formulate a system development plan within a reasonable period of time) for these measures by the day of enforcement (May 19, 2012).The DICJ plans to proactively support financial insti-tutions in taking these steps (further brushing them up, etc.) through a series of briefings and training sessions.

Column 4 : Measures for smooth repayment of deposits, etc. in the event of financial institution failure

III. Annex


26

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

I. DIC

J’sO

perations

(2) Promoting Maintenance of Depositor’s Name-based Aggregation Database and Improvement of the System

The DICJ identifies all accounts held by an identical depositor and tallies the deposits in those accounts based on depositor data submitted by a failed financial institu-tion. If the data is not accurate, or if the submission of the data is delayed, the DICJ will face difficulty in calcu-lating the amount of insured deposits promptly and the smooth protection of deposits will be hampered.Therefore, the Deposit Insurance Act requires each finan-cial institution to provide depositor data recorded on magnetic tapes (hereinafter referred to as “the name-based aggregation database”) to the DICJ without delay in the event of failure and to continuously keep the name-based aggregation database and system in good order (Article 55-2 of the Deposit Insurance Act). Furthermore, in order to ensure the smooth repayment of the insured deposits, each financial institution is required to develop and maintain their own business systems so as to promptly reflect the feedback of the results of the name-based aggregation of deposits from the DICJ (Article 58-3 of the Deposit Insurance Act).In FY2011, the DICJ conducted database verification, training and advice as follows.

(i) Verification of the depositors’ name-based aggregation databaseThe DICJ requires each financial institution to submit its name-based aggregation database in order to ensure smooth name-based aggregation of deposits in the event of the failure of a financial institution in accordance with Article 37 of the Deposit Insurance Act. The DICJ uses its own system to check whether the database conforms to the designated format.When the DICJ finds any incorrect data (or any data that is suspected to be incorrect) as a result of database verification, it sends such data back to the financial institution concerned for correction and confirmation. The DICJ also sends back the name-based aggregation results obtained through the use of its own system and requires financial institutions to confirm that they can reflect these results in their own business systems promptly.In FY2011, the DICJ conducted database verifica-tion at 82 insured financial institutions.

(ii) Training and adviceIn order to promote the maintenance of the name- based aggregation data and the system, the DICJ has dispatched its staff members to individual financial institutions based on their requests in order to provide training and advice tailored to their respec-tive circumstances.In FY2011, we have provided trainings and sugges-tions to a total of 50 financial institutions.

Financial institution DICJ

After the close of business on Friday–Sunday(In the case of failure on a weekend)

(1) Preparation of depositor data (magnetic tapes) and submission to the DICJ

Submission

(2) Implementation of the name-based aggregation of deposits using the DICJ’s own system

(4) Based on electronic data prepared by the DICJ (described in the right column), collectively setting system measures (establishment of caution codes, etc.) to inhibit repayment for the accounts (described in the right column)

Feedback

(3) Preparing electronic data on the “accounts whose full or partial amount is non-reimbursable” and feeding back the data to the financial institution

(5) Based on data prepared by the DICJ (described in the right column), dividing a mixed account (account part of which is non-reimbursable) into an insured deposit portion and an uninsured deposit portion and separately managing it by inhibiting only the repayment of the uninsured deposit portion (with the establishment of caution codes, etc.) (particularly for ordinary deposits).

Feedback

(3) Preparing the data on the non-reimbursable amount and feeding back it to the financial institution (adding the above information to the electronic data (3))

Monday

• Repayment of insured deposits (including deposits for payment and settlement purposes)

• Acceptance of deposits• Commencement of accepting depositors’ requests for the

offsetting of deposits against loans

After Monday

• Submitting deposit data on deposits made and withdrawn after failure to the DICJ (daily)

Submission

• Separating deposits before and after failure based on legal bankruptcy proceedings

• Commencement of accepting depositors’ requests for the estimated proceeds payment of uninsured deposits

• Deciding on the estimated proceeds payment rate

The flow of failure resolution under limited coverage and relations with the law revision in 2011 shows the portion for which the establishment of a system has been previously required. shows the portion for which the establishment of a system is newly required due to the law revision in 2011.

III. Annex

27


verview

of the DIC

J’s A

ctivities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

I. DIC

J’sO

perations

(i) Definition of “name-based aggregation of deposits”In Japan, deposit insurance protects the full amount of deposits for payment and settlement purposes,(Note) while regarding other types of deposits, it protects up to a total of ¥10 million in principal and interest accrued thereon per deposi-tor per financial institution till the day of failure. Therefore, in the event of the failure of a finan-cial institution, it is imperative to identify all accounts held by an identical depositor at the financial institution and tally the deposits in those accounts. This operation is called “name-based aggregation of deposits.”Note: Deposits for payment and settlement purposes refer to

deposits that meet the following three requirements — bearing no interest, payable on demand, and capable of providing payment and settlement services.

(ii) Definition of an identical depositor in relation to name-based aggregation of depositsThe definition of an identical depositor is as follows:1) IndividualsEach individual is regarded as one depositor. Spouses, parents and children are regarded as different depositors. However, deposits held in accounts using another person’s name (fictitious-name accounts, borrowed-name accounts, etc.) are not protected by deposit insurance. In the case of sole proprietors, deposits for business and

non-business purposes are aggregated as deposits under the same name.2) Juridical personsEach juridical person is regarded as an individual depositor.3) Unincorporated (non-juridical) associations

and foundationsEach unincorporated (non-juridical) association and each foundation is regarded as an individual depositor.In order for organizations to fall under the category of unincorporated (non-juridical) associations or foundations, they are generally required to be structured as an organization and the method of managing the organization must be specified in the articles of association and other guidelines.The eligibility is determined on a case-by-case basis in light of the specific circumstances of each organization.4) Voluntary organizationsVoluntary organizations (which refers to associa-tions other than juridical persons and unincorpo-rated [non-juridical] associations and foundations; the same shall apply hereinafter) are not regarded as individual depositors. Deposits held in the name of a voluntary organization are divided into those in the names of individual members comprising the organization according to their respective amount of deposits.

Column 5: What is name-based aggregation of deposits?

[Maintenance of depositor data and name-based aggregation of deposits

in the event of financial institution failure]

(i) Regularly keep depositor data and systems in good order

(ii) Promptly submit the depositor data necessary for the name-based aggregation of deposits to the DICJ

Failure

(iv) Repayment of insured deposits on the basis of the results of name-based aggregation of deposits

(iii) Implement name-based aggregation of deposits and feed back the results to the financial institution

DICJ

Verification of maintenance of the data through on-site inspection and system verification

Depositors

(v) Receipt of insured deposits

Submission of depositorinformation

Financial Institutions

III. Annex


28

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

I. DIC

J’sO

perations

(3) On-site Inspections

(i) On-site inspectionsThe Deposit Insurance Act stipulates that the FSA Commissioner may authorize the DICJ to conduct on-site inspection of a financial institution when the Commissioner deems the inspection to be necessary in order to ensure smooth enforcement of the Act.The scope of on-site inspections that may be under-taken by the DICJ is defined in Article 137, paragraph 6 of the Deposit Insurance Act. Under this provision, the DICJ may conduct inspections in order to check (i) whether the payment of insurance premiums is being made properly (item 1 of the said provision); (ii) whether financial institutions are implementing measures to improve the name-based aggregation databases and systems as required (item 2); and (iii) the estimated amount of deposits and other claims to be reimbursed in the event of the failure of a financial institution (item 3). There are also penal provisions concerning refusal of on-site inspection and other inappropriate acts (Article 143, paragraph 2 of the Deposit Insurance Act).In August 2001 the DICJ began implementing inspections under item 2 (the name-based aggregation of deposits etc.). Also, Article 58-3, paragraph 1 of the Deposit Insurance Act was revised in May 2011 and enforced in May 2012 (including the Ordinance of the Cabinet Office on the measures provided in Article 58-3, paragraph 1 of the Deposit Insurance Act). In order to comply with this revision, the DICJ

changed the inspection policy, focusing on (1) prepa-ration of the procedure manual in order to divide all deposits into payable accounts and non-payable accounts upon failure, (2) organization of the computer system to provide data on deposits and withdrawals of deposits to the DICJ after the failure, and (3) preparation of other procedure manuals, including one explaining the offsetting of deposits and loans by depositors’ requests and/or depositors’ claims, which are to be purchased by the DICJ based on the estimated proceeds payment. These inspection items described above are to be added to the former inspection, which is known as the “depositors’ name-based aggregation inspection.”In addition, the DICJ began implementing the inspection under item 1 in January 2003 (payment of insurance premiums). As appropriate payment of insurance premiums is indispensable for the stable operation of the deposit insurance system, the DICJ is striving to ensure that premium payments are being made properly so as to maintain equality among financial institutions as payers of insurance premiums. Regarding the inspection under item 3 (calculation of the estimated proceeds payment rate), the DICJ is prepared to conduct inspections when necessary in order to ensure that financial institu-tions properly pay the estimated proceeds in the event of their failure.The implementation status of inspections until the 2011 inspection year is shown below. [See P129: III. 2. (1) (i)]

Number of on-site inspections implemented (as of June 30, 2012) (Unit: number of financial institutions inspected)

Inspection year (Note 1) Number of financial institutions inspected Banks, etc. (Note 2) Shinkin banks (Note 3) Credit cooperatives (Note 4)

2001 39 2 14 23

2002 66 1 31 34

2003 100 10 56 34

2004 113 17 66 30

2005 105 14 69 22

2006 100 35 35 30

2007 100 58 29 13

2008 116 22 59 35

2009 91 5 44 42

2010 46 5 27 14

2011 57 8 44 5

Notes: 1. The inspection year is the working year in which the inspection was conducted (from July to June of the following year). 2. Banks, etc. include labor banks and the Rokinren Bank. 3. Shinkin banks include the Shinkin Central Bank. 4. Credit cooperatives include the Shinkumi Federation Bank.

III. Annex

29


verview

of the DIC

J’s A

ctivities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

I. DIC

J’sO

perations

(ii) Follow-up of the results of inspections conducted by the DICJConcerning matters pointed out by the DICJ during inspections, the FSA or Local Finance Bureaus requires financial institutions to report on the status of improvement based on Article 24 of the Banking Act and Article 136 of the Deposit Insurance Act and then conducts a hearing. The DICJ also partici-pates in this hearing and advises financial institutions so as to enable them to make effective improvement.

(4) Collaboration among Persons Undertaking On-site Inspections, System Verification and Training/Advice

Financial institutions are required to regularly improve their name-based aggregation databases and systems (i) because new accounts are opened and data related to depositors change on a daily basis and (ii) because mergers between financial institutions and the modifica-tion and upgrading of systems frequently occur.In order to effectively promote the maintenance of the depositor’s name-based aggregation databases and systems of financial institutions, persons-in-charge of the DICJ collaborate in implementing on-site inspection, database verification, and training and advice.In addition, the DICJ conducts comprehensive manage-ment and analysis of the status of the maintenance of the name-based aggregation databases of financial institu-tions and further promotes the following collaborative activities so as to organically coordinate the above measures and efficiently and effectively implement them.• Regarding the implementation of on-site inspection,

database verification, and training and advice, DICJ staff endeavor to share information at all times.

• On-site inspections are conducted in light of the results of database verification, and training and advice.

• Upon confirmation of the results of database verifica-tion or upon the start of work on modifications, DICJ staff give advice to the financial institutions concerned as to the results of verification and the state of mainte-nance of the name-based aggregation database, for example by directly visiting the institutions in order to provide training.

III. Annex


30

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

I. DIC

J’sO

perations

(1) Implementation of Financial Assistance etc. and Collection of Assets

In order to facilitate the resolution of the failures of financial institutions and inject capital into financial institutions, the DICJ has so far provided monetary grants totaling ¥18,990.1 billion, purchased assets worth

¥9,830.5 billion, injected capital worth ¥12,912.9 billion into banks and provided other financial assistance total-ing ¥6,383.1 billion. By the end of March 2012, ¥9,938.8 billion worth was recovered out of the assets purchased, ¥12,265.6 billion worth out of the funds used for injecting capital into banks and ¥5,025.1 billion worth out of other financial assistance.

2. Proper and Steady Operations Related to Failure Resolution and Asset Holdings

Status of financial assistance etc. and recovery (as of March 31, 2012) (Unit: billion yen)

Types of financial assistance, etc.The amount of financial

assistance, etc., implementedThe cumulative amount of recoveries, etc. (Note 1) (Note 2)

1) Monetary grants (Note 3) 18,990.1 —

Of the above, monetary grants to banks under special public management 6,376.4 —

Of the above, monetary grants to banks under special crisis management 256.3 —

2) Purchase of assets (Note 4) (Note 5) 9,830.5 9,938.8

Purchase of assets from failed financial institutions 6,535.1 7,531.3

Of the above, the purchase of bad assets from banks under special public management 1,179.8 1,659.2

Of the above, the purchase of assets from banks under special crisis management 99.9 112.5

Purchase of normal assets from banks under special public management (Note 6) 2,942.1 1,724.3

Of the above, the purchase of shares from banks under special public management 2,939.7 1,715.7

Purchase of assets from sound financial institutions 353.3 683.2

3) Capital injection (Note 5) (Note 7) 12,912.9 12,265.6

Capital injection under the former Financial Functions Stabilization Act 1,815.6 1,652.6

Capital injection under the Early Strengthening Act 8,605.3 9,188.3

Capital injection under the Deposit Insurance Act 1,960.0 1,418.8

Capital injection under the Organization Restructuring Act 6.0 6.0

Capital injection under the Financial Functions Strengthening Act 526.0 —

4) Other 6,383.1 5,025.1

Taking over assets under the warranty for latent defect provisions 1,222.6 667.9

Compensation for losses (Note 8) 576.6 —

Of the above, compensation for losses to banks under special public management 494.5 —

Debt assumption (debt assumption to assuming financial institutions) 4.0 3.8

Lending (Note 9) 4,579.9 4,353.4

The above figures are rounded off.

Notes: 1. In addition to the amount of collection equivalent to the book value portion, the cumulative amount of recoveries, etc. includes the portion of the amount of collection exceeding the book value, such as profits from the collection of claims, profits on the sale of securities and on that of real estate property, and the amount of price adjustment of the purchased assets (*), but it excludes interest and dividend income, etc.

* The amount of purchase price adjustment: a certain period is required from the base date of evaluation based on which the purchase price of assets is decided until the RCC actually takes over assets from failed financial institutions. The changes in asset price arising from such factors as the progress in collection during this period are to be settled (adjustment of purchase price) following close examination and agreement between the RCC and the liquidated corporation (the failed financial institution) after the takeover. Upon settlement, the amount equivalent to the increase or decrease of the purchase price concerned following adjustment shall be the amount of purchase price adjustment. The amount of purchase price adjustment was ¥1,201.2 billion as of March 31, 2012.

2. In addition to the cumulative amount of recoveries, etc. shown in the table above, ¥2 billion for banks under special public management (¥1 billion each for the former Long-Term Credit Bank of Japan and the former Nippon Credit Bank), and ¥120 billion for banks under special crisis management (Ashikaga Bank ¥120 billion) have been received as the proceeds from the sale of shares.

3. Of the monetary grants, ¥10,432.6 billion is financed by the redemption (use) of grant bonds (¥13,000 billion) (*) (currently confirmed as the public burden). The remaining amount is to be financed from deposit insurance premiums. The deposit insurance premiums which the DICJ collected from financial institutions by March 31, 2012, totaled ¥9,459.2 billion. If the amount of monetary grants is reduced as a result of close examination, the reduced amount is paid to the national treasury.

* The grant bonds were issued to finance the portion of the amount of monetary grants exceeding the insurance payout cost in cases of failure resolution up to March 31, 2002. (Redemption of the grant bonds was completed on March 31, 2003.)

III. Annex

31


ICJ’s

Operations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

4. Purchase of assets from failed financial institutions includes purchase of assets from the Shinkumi Federation Bank (SFB, the central bank for Japan credit cooperatives) (the amount of financial assistance is ¥15.9 billion and the cumulative amount of recoveries, etc. is ¥24.4 billion) and purchase of assets from assuming financial institutions in re-succession.

5. The above table does not include the compensation for losses granted to the RCC by the DICJ — ¥158.2 billion for the former Long-Term Credit Bank of Japan and the former Nippon Credit Bank and ¥28.3 billion for Mizuho FG related to capital injection under the former Financial Functions Stabilization Act; ¥22.4 billion for Ashigin FG related to capital injection under the Early Strengthening Act; the amount of special compensation for losses (¥78.5 billion) arising from the entrustment of asset purchase operations; and ¥4.1 billion related to the purchase of assets from banks under special crisis management — since the RCC is not a financial institution eligible for financial assistance.

6. Purchase of normal assets from banks under special public management includes the purchase of loan claims and other assets (the amount of financial assistance is ¥2.4 billion and the cumulative amount of recoveries, etc. is ¥8.7 billion).

7. Of the cumulative amount of recoveries, etc. related to capital injection, which stood at ¥12,265.6 billion, ¥10,789.6 billion represents the amount of capital injection.

8. Compensation for losses includes the compensation for losses to the Shinkumi Federation Bank (SFB, the central bank for Japan credit cooperatives) (¥82 billion).

9. Lending includes the lending of funds to banks under special public management (the amount of financial assistance is ¥4,200 billion and the cumulative amount of recoveries, etc. is ¥4,200 billion), the lending of funds to failed financial institutions (the amount of financial assistance is ¥371.9 billion and the cumulative amount of recoveries, etc. is ¥145.4 billion) and the lending to assuming financial institutions (the amount of financial assistance is ¥8 billion and the cumulative amount of recoveries, etc. is ¥8 billion).

So far, the DICJ has provided financial assistance in a total of 182 cases of financial institution failure since 1992 under the provisions of Articles 64 and 118 of the

Deposit Insurance Act and Article 72 of the Financial Revitalization Act.

Financial assistance in the resolution of failed financial institutions (as of March 31, 2012)(i) Financial assistance on a fiscal year basis (Unit: billion yen)

Fiscal year Number of casesMonetary grants

Asset purchases

LendingDebt

assumptionTo assuming financial institutions

To failed financial institutions (equitable financial assistance)

1992 2 20.0 — 8.0 —

1993 2 45.9 — — —

1994 2 42.5 — — —

1995 3 600.8 — — —

1996 6 1,315.8 90.0 — —

1997 7 152.4 239.1 — 4.0

1998 30 2,674.1 2,681.5 — —

1999 20 4,637.4 1,304.4 — —

2000 20 5,154.7 850.1 — —

2001 37 1,639.4 406.4 — —

2002 51 2,326.7 794.9 — —

2003 0 — — — —

2004 0 — — — —

2005 0 — — — —

2006 0 — — — —

2007 0 — — — —

2008 1 256.3 1.7 — —

2009 0 — — — —

2010 0 — — — —

2011 1 46.1 77.9 53.0 — —

Total 18218,912.2 77.9

6,420.9 8.0 4.018,990.1

Notes: 1. Figures for each fiscal year are calculated based on the date of implementation of financial assistance (the date of transfer of business). (The amount of monetary grants is the figure after amendment of the amount as of the date of initial implementation to reflect a subsequent reduction.)

2. The purchase of assets from the Long-Term Credit Bank of Japan and the Nippon Credit Bank was made twice each, while the monetary grants to the pair of Tokyo Kyowa Credit Union and Anzen Credit Union and the asset purchase from the pair of Fukutoku Bank and Naniwa Bank were made once each. Consequently, the number of cases of financial assistance matches the number of failed financial insti-tutions. Midori Bank cases (asset purchase in FY1998 and monetary grant in FY1999) are counted only in FY1998.

III. Annex


32

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

I. DIC

J’sO

perations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

3. “Monetary grants” comprise (1) monetary grants to assuming financial institutions, and (2) monetary grants (equitable financial assistance) to failed financial institutions to ensure equitability among the creditors of these failed financial institutions.

4. “Asset purchases” include asset purchases from assuming financial institutions in re-succession in accordance with Article 101 of the Deposit Insurance Act.

Asset purchases from failed financial institutions totaled ¥6,519.1 billion, the sum of the asset purchases made in accordance with Article 129 of the Deposit Insurance Act (¥98.2 billion) and the above financial assistance.

5. Lending: since a low-interest loan was a typical means of management assistance for ailing financial institutions at the time of the failure of Toho Sogo Bank, an application for financial assistance through a loan was filed.

6. Debt assumption: at the time of the failure of Hanwa Bank, Kii Deposit Management Bank was the financial institution responsible for the repayment of deposits. The DICJ assumed the financial obligations that had not been inherited by the Kii Deposit Management Bank.

7. Since the above figures are rounded off, the total does not always match the sum of the amounts of individual items.

(ii) Financial assistance by category of financial institution (Unit: billion yen)

Category of financial institution

Number of cases

Monetary grants Asset purchases Lending Debt assumption

Number Amount Number Amount Number Amount Number Amount

Total 182 178 18,990.1 169 6,420.9 1 8.0 1 4.0

Under full protection 169 166 17,783.1 167 6,366.3 0 — 1 4.0

Banks 22 18 12,694.5 19 4,630.4 1 8.0 1 4.0

Under full protection 17 14 11,724.2 17 4,575.8 0 — 1 4.0

Shinkin Banks 27 27 972.8 25 550.0 0 — 0 —

Under full protection 25 25 926.8 25 550.0 0 — 0 —

Credit cooperatives 133 133 5,322.8 125 1,240.6 0 — 0 —

Under full protection 127 127 5,132.1 125 1,240.6 0 — 0 —

Note: The above figures for amounts are rounded off to the nearest 100 million yen.

(2) Management and Disposal of Assets Purchased from Failed Financial Institutions

(i) Recovery of assets purchased from the failed financial institutionsOf the assets purchased, the DICJ purchased ¥6,535.1 billion worth from failed financial institutions, and

recovered ¥7,531.3 billion through debt collection and the sale of assets by the end of March 2012.When executing operations (purchase, management and disposal of assets), the DICJ entrusted most of these operations to the RCC, which is a DICJ subsidiary.

The DICJ provides guidance and advice necessary for the execution of the RCC’s operations under such acts as the Deposit Insurance Act, the Financial Revitalization Act and the Jusen Act. The DICJ’s support activities range widely, including the recovery of transferred claims; civil recovery proceedings; general laws and regulations as well as practical affairs related to real estate; recovery of claims based on the discovery of concealed assets through the use of the investigative

power granted to the DICJ; and the pursuit of civil and/or criminal liability of directors of failed financial institu-tions and other persons concerned. [See P47: II. 3]Moreover, the RCC is required to pay to the DICJ the profits arising from the asset collection each year minus the losses arising from the collection and the collection costs. As of the end of June 2012, the profits paid to the DICJ since FY1996 totaled ¥1.3 trillion (including ¥0.8 trillion that was transferred to the Government).

Amount of purchase of assets from failed financial institutions and cumulative amount of recoveries (as of March 31, 2012) (Unit: billion yen)

Category Amount of purchaseCumulative amount

of recoveries

Purchase of assets 9,830.5 9,938.8

Purchase of assets from failed financial institutions 6,535.1 7,531.3

Of the above, purchase of non-performing assets from banks under special public management 1,179.8 1,659.2

Of the above, purchase of assets from a bank under special crisis management 99.9 112.5

Purchase of normal assets from banks under special public management (Note 1) 2,942.1 1,724.3

Purchase of assets from sound financial institutions (Note 2) 353.3 683.2

Notes: 1. Mainly purchases of shares held by banks under special public management. [See P39: II. 2. (4) (ii)]

2. [See P40: II. 2. (5)]

III. Annex

33


ICJ’s

Operations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

(ii) Debt recovery activities by the RCC1) Debt recovery policy of the RCCThe RCC adheres to the philosophy of minimizing the burden on taxpayers in pursuing claim recovery and has endeavored to ensure that its recovery efforts are fair and proper by employing recovery proce-dures that emphasize negotiations based on due consideration for the actual circumstances of individ-ual debtors.In particular, because of an increase in requests for the modification of loan terms owing to the deterio-ration of the loan repayment environment for debtors due to the worsening of the economic conditions following the Lehman shock and the aging of debtors and other factors, it has become necessary to give increased consideration to the protection of custom-ers. Therefore, the RCC has continued to rigorously deal with malicious debtors and antisocial forces from the perspective of compliance with laws and regulations, and at the same time, regarding consci-entious debtors, the Corporation aims to achieve appropriate settlements for resolution cases after holding sufficient hearings with debtors about their circumstances while taking care to enable them to pursue rehabilitation and maintain their livelihoods.In addition, from the perspective of ensuring appro-priate processing of complaints and inquiries from customers, the RCC has established the Complaint Processing Committee in order to seek outside experts’ opinions and recommendations concerning the status of processing. The RCC will reflect opinions and recommendations expressed at the committee’s meetings in its future business opera-tions.

2) Debt recovery activities by the RCCIn FY2011, debts totaling ¥110.6 billion were recov-ered. The total includes ¥24.7 billion transferred from the seven former Jusen companies, ¥81.3 billion purchased from failed financial institutions, and ¥4.6 billion purchased from sound financial institutions.

The cumulative amount of payments from the RCC to the DICJ (as of March 31, 2012) (Unit: billion yen)

Payments related to assets transferred from the former Jusen companies (Article 12, item 10 of the Jusen Act) 3.5

Payments related to assets purchased from failed financial institutions (Article 8, paragraph 1, item 2-3 Supplementary Provisions of Deposit Insurance Act)

976.5

Payments related to assets purchased from sound financial institutions (Article 54, paragraph 1, item 3 of Financial Revitalization Act) 331.5

Total 1,311.6

Notes: 1. The above figures include profits recorded by the RCC for FY2011 (to be recorded by the DICJ for FY2012).

2. In addition to the above, the RCC paid to the DICJ profits related to capital injection, which totaled ¥1,686.4 billion (compensation for losses is not taken into account although the DICJ records profits paid by the RCC as current revenue on the profit and loss statement for each account and records compensation for losses paid to the RCC as current expenses in each account).

3. As for the payment of profits based on the Jusen Act, in cases where the profit from the recoveries of transferred assets in the relevant year exceeds the amount of the portion of the secondary losses that must be covered by public funds (half of the secondary losses), the excess portion should be paid via the DICJ to the Government until the cumulative payment amount reaches the amount of subsidies provided in the past (*) (Article 12, item 10 and Article 13 of the Jusen Act).

* Subsidies totaling ¥680 billion from the Emergency Financial Stabilization Contribution Fund (Article 7, paragraph 1 of the Jusen Act) and subsidies based on Article 8 of the Jusen Act (no payment has so far been made).

III. Annex


34

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

I. DIC

J’sO

perations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

Debt collection performance of the RCC

4,000.0

3,500.0

3,000.0

2,500.0

2,000.0

1,500.0

1,000.0

500.0

0.0

(billion yen)

Am

ount collected / Cumulative am

ount collected

80%

70%

60%

50%

40%

30%

20%

10%

0%

Collection ratio

Book value of claims when transferred (A):¥4,655.8 billion

FY1996 FY1997 FY1998 FY1999 FY2000 FY2001 FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011

Amount collected

Cumulative amount collected (B)

Collection ratio (B/A)

Claims transferred from the seven former Jusen companies

24.7

3,405.8

73.2%

39.0

3,381.2

72.6%

47.7

3,342.2

71.8%

61.3

3,294.5

70.8%

70.2

3,233.1

69.4%

86.9

3,163.0

67.9%

100.3

3,076.0

66.1%

117.6

2,975.7

63.9%

139.4

2,858.1

61.4%

170.0

2,718.7

58.4%

250.6

2,548.7

54.7%

321.7

2,298.1

49.4%

426.0

1,976.4

42.4%

650.5

1,550.4

33.3%

655.3

899.9

19.3%

244.5

244.5

5.3%

Notes: 1. The claims remaining in the RCC’s Jusen Account were transferred to the Post-contract Account, a separate account at the RCC, at the end of November 2011. Because collection operations in the RCC’s Jusen Account was concluded at the end of November 2011, the figures reflect recovered claims through the end of that month.

2. Since the above figures are rounded off, the total sometimes does not match the sum of the amounts of individual items.

8,000.0

7,000.0

6,000.0

5,000.0

4,000.0

3,000.0

2,000.0

1,000.0

0.0Cum

ulative total debt when transferred

150%

140%

130%

120%

110%

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

Collection ratio

(billion yen)

FY1996 FY1997 FY1998 FY1999 FY2000 FY2001 FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011

Cumulative total book value when transferred (A)

Cumulative amount collected (B)

Collection ratio (B/A)

5,363.8

6,340.7

118.2%

5,067.5

6,254.7

123.4%

5,067.5

6,193.2

122.2%

5,067.5

6,119.8

120.8%

5,067.0

6,010.6

118.6%

5,060.2

5,815.7

114.9%

5,060.2

5,491.9

108.5%

5,042.8

4,961.6

98.4%

4,982.4

4,255.9

85.4%

4,918.3

3,483.5

70.8%

4,127.9

2,729.2

66.1%

3,794.9

1,893.5

49.9%

3,140.1

953.2

30.4%

2,016.7

347.5

17.2%

596.6

85.7

14.4%

384.1

34.3

8.9%

Claims purchased from failed institutions and sound financial institutions

Notes: 1. The amount of claims purchased from failed institutions in FY1996 represents the total amount collected in FY1995 and FY1996.

2. The trust scheme from the transfer claims of Hokkaido Takushoku Bank is excluded.

3. Figures include transfer claims of Hanwa Bank (collected and commission) and the amount of assets purchased under Article 129 of the Deposit Insurance Act and under Article 59 of the Financial Revitalization Act.

4. In some cases, the book debt value after transfer may change due to adjustments in purchase prices and other factors.

5. The figures for FY2011 include the amount of claims transferred from the Jusen Account at the end of November 2011 and the amount of those claims recovered.


Final resolution of Jusen claims in the RCCRecovery and disposal of Jusen claims was concluded by December 2011, with final secondary losses coming to ¥1,401.7 billion; in line with the proposal approved by the Cabinet in January 1996 and the Jusen Act, govern-ment and private-sector financial institutions are to bear equal shares of these losses (¥700.9 billion each). The government’s portion of this liability was covered using funds available under the revised Deposit Insurance Act

and new fiscal measures were thus avoided. The private-sector portion of this liability was resolved within the framework of the Jusen Act.More specifically, the government’s liability was met by using ¥218.9 billion in income from claim recovery in excess of book value that arose from the recovery of claims beyond their acquisition value (book value) in the RCC’s Jusen Account, ¥138.8 billion in cumulative profits from loan interest revenues in this same account,

III. Annex

35


ICJ’s

Operations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

¥183.8 billion in Post-contract Account profits (profits secured by the RCC in recovering the claims of failed financial institutions), and ¥166.2 billion in returns on the New Financial Stabilization Fund (Fund No. 2) estab-lished with contributions from private-sector financial institutions to lighten the taxpayer burden.Applied to the private-sector liability, on the other hand, were ¥145.6 billion in returns from the Financial Stabili-zation Contribution Fund (Fund No. 1), backed by contri-butions from private-sector financial institutions to the RCC for the purpose of ensuring the stability of the

financial system, ¥138.8 billion in cumulative profits in the RCC’s Jusen Account (equal to the amount applied above against the government’s liability, as these profits were divided equally between the government and the private sector), and ¥416.5 billion in principal from the Financial Stabilization Contribution Fund. The amount of ¥316.5 bil l ion —the result of deducting the ¥100 billion investment in the RCC from the above ¥416.5 billion—was transferred from the DICJ’s General Account to the Financial Stabilization Contribution Fund.

Relationship between the DICJ and the RCC concerning collection operationsThe DICJ entrusts most of operations related to the management and disposal of assets purchased from failed financial institutions to the RCC, which is a subsidiary of the DICJ. The RCC is closely related to the DICJ as it is in charge of actually implementing operations concern-ing each account of the DICJ. The following chart describes (i) the flow of funds between the DICJ and the RCC (payment of profits, loss compensation, etc.) and shows (ii) that the DICJ provides guidance and advice necessary for the execution of the RCC’s operations based on the Deposit Insurance Act, the Jusen Act, the Financial Revitalization Act and other laws and (iii) that the DICJ assists the RCC’s collection of assets by identifying the debtors’ assets that may remain concealed by exercising the power to conduct asset investigations (investigation subject to consent and

investigation with penal provisions), which is granted to the DICJ based on those laws.

(iii) Management of corporations under liquidation and their lawsuitsThere were 8 corporations under liquidation turned from failed financial institutions as of the end of FY2011. With settlements reached in litigation in which these liquidators stood as defendants, an increase of ¥1.4 billion was made in monetary grants.

General AccountJusen Account

Financial Stabilization Contribution Fund

(3) ¥183.8 billion in

profits

Final resolution scheme for Jusen claims

DICJ

Private Financial Institutions

New Financial Stabilization Fund

(Fund No.1)(Total funds: ¥1,007.0 billion)

Investment in RCC: ¥100.0 billionInvestment management: ¥907.0 billion

Post-Contract Account Jusen Account (recovery of Jusen claims)

RCC

[Secondary losses: ¥1,401.7 billion yen (¥700.9 billion each for public and private institutions)]

National government(1) Recoveries exceeding book value ¥218.9 billion(2) Cumulative profits ¥138.8 billion(3) Post-contract account profits ¥183.8 billion(4) Returns on New Financial Stabilization Fund ¥166.2 billion

Private sector1) Fund returns: ¥145.6 billion2) Cumulative profits: ¥138.8 billion3) Fund principal: ¥416.5 billion

1) Subsidies from fund returns3) Subsidies from fund principal

(4) Donation of returns

(Fund No. 2)(Principal: ¥793.2 billion)

(Recovery of claims of failed financial institutions)

Transferred under the revised Deposit

Insurance Act

Contribution Payment of deposit insurance premiums

4) Transfer (¥316.5 billion)

Contribution

Note: The amount exceeding the government’s liability (¥6.8 billion) is to be paid to the national treasury.

III. Annex


36

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

I. DIC

J’sO

perations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

Inspection with penal provisions (Deposit Insurance Act, Suppl. 14-2) (Financial Revitalization Act 58)

Inspection(Deposit Insurance Act, Suppl. 13) (Financial Revitalization Act 58)

• Resolution and collection operation

• Specific resolution and collection operation• Resolution and collection of difficalt recovery claims

Lending and debt guarantee(Deposit Insurance Act, Suppl.11) (Jusen Act 11) (Financial Revitalization Act 57) (Early Strengthening Act 11) (Financial Functions Strengthening Act 39)

Collection Collection

DebtorsDebtors

• Entrusted recovery or disposal of loans by financial institutions (Financial Revitalization Act 59)

Former Jusen

Debtors

Investigation (Jusen Act 15)

Investigation with penal provisions (Jusen Act 17)

Collection

(Former) HLAC

RCC

(Former) RCB

Guidance and advice (Deposit Insurance Act, Suppl. 7 I ③) (Jusen Act 3 I ④) (Financial Revitalization Act 53 III) (Early Strengthening Act 10 II ④)

Profit payment or loss compensation (Financial Functions Strengthening Act 41 and 40)

Entrustment of subscription for shares, disposal of purchased shares and loan claims, and other operations (Early Strengthening Act 10)

Entrustment of subscription for shares, purchasing of trust beneficiary rights, disposal of purchased shares and loan claims, and other operations (Financial Revitalization Act 36)

Profit payment or loss compensation (Early Strengthening Act 13 and 12)

Profit payment or loss compensation (Financial Revitalization Act 54 I ③ and 58)

Treasury payment(Deposit Insurance Act, Suppl. 21 II)

CapitalSubscription

CapitalSubscription

CapitalSubscriptionFinancial

Assistance (Jusen Act 24)

Treasury Payment or Government Subsidy

CapitalSubscriptionCapital

Subscription

Financial Contribution

Financial Contribution

Jusen Account

General Account

DICJ

FinancialStabilization

Fund

Emergency Financial

Stabilization Fund

Profit payment or loss compensation (Jusen Act 8 and 12)

Subsidies(Jusen Act 7)

Capital subscription (Jusen Act 3 I ①)

Half compensation for losses over original estimation at the asset transfer (Jusen Act 10)

Capital subscription (Deposit Insurance Act, Suppl. 9)

Profit payment or loss compensation (Deposit Insurance Act, Suppl. 10-2 and 8 I ②-3)

Resolution and collection agreement (Deposit Insurance Act, Suppl. 8) Entrustment of purchase (Deposit Insurance Act, Suppl. 10)

Resolution and collection agreement concerning difficult recovery claims(Deposit Insurance Act, Suppl. 15-5 II)Entrustment of purchase(Deposit Insurance Act, Suppl. 15-5 I)

Profit payment or loss compensation(Deposit InsuranceAct, Suppl. 15-5 VIII and 15-5 II ③)

Special resolution and collection agreement(Financial Revitalization Act 54) Entrustment ofpurchase (Financial Revitalization Act 53 I ②)

Financial Revitalization

Account

Early Strengthening

Account

Financial FunctionsStrengthening

Account

BOJ Private Financial Institutions

Government

III. Annex

37


ICJ’s

Operations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

(3) Purchase/Collection of Specified Difficult Recovery Claims

The DICJ was assigned responsibility for the purchase/collection of specified difficult recovery claims to stabi-lize the financial system as a whole by blocking ties with antisocial forces etc. for the sake of ensuring sound finances at financial institutions, and a system was put in place to entrust these tasks to the RCC, a contracted bank. “Specified difficult recovery claims” are those claims held by financial institutions under exceptional conditions that could or do make it impractical for finan-cial institutions to take measures normally taken for the collection of claims. The Deposit Insurance Act refers to the following two types of claims as examples:1) The debtor or guarantor is a member of antisocial forces etc., and it is deemed likely that this debtor or guarantor will not abide by the terms of the agreement concerning the claim in question.

2) Actions are likely to be taken to impede participation in the auctioning of real estate serving as collateral for the claim in question.1) is an attribute requirement, focusing on whether the debtor/guarantor is a member of antisocial forces etc., while 2) is a behavioral requirement, focusing on auction obstruction, violence and other actions that impede the recovery of claims, regardless of whether or not the actor is a member of antisocial forces.The operations pertinent to the purchase/collection of such claims are managed under the DICJ’s General Account, and the DICJ has been granted the authority to conduct asset investigations.On October 28, 2011, the DICJ make the “Guideline for Purchase of Specified Difficult Recovery Claims” public by posting these on its website. Specified difficult recov-ery claims are to be purchased following the procedures diagrammed below.

Private Financial Institutions

Application for purchase of specified difficult recovery

claims

Sale of specified difficult recovery claims

DICJ

Receipt of application

Purchase Examination Committee

Policy Board

RCC

Purchase of specified difficult recovery claims

Profits/losses (posted in Post-Contract Account)

Purchase decisions

Receipt of profitsCompensation for losses

(posted in General Account)

Entrustment of claim purchases to RCC

Asset purchase agreement

Compensation for losses

Payment of profits

Collection

Purchase consignment agreement

III. Annex


38

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

I. DIC

J’sO

perations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

(4) Operations Related to Banks under Special Public Management

(i) Management and collection of loansAs described in II. 2. (2) Management and Disposal of Assets Purchased from Failed Financial Institu-tions, the DICJ purchased non-performing loans worth a total of ¥1,179.8 billion from banks under special public management (the former Long-Term Credit Bank of Japan and the former Nippon Credit Bank) under Article 72 of the Financial Revitaliza-tion Act, and it has so far collected ¥1,659.2 billion.In addition, the DICJ took over non-performing loans in accordance with the warranty for latent defect (loan buy-back) provision, as stipulated in the share sales agreement concerning the transfer of the former Long-Term Credit Bank of Japan (now known as Shinsei Bank) and the former Nippon Credit Bank (now known as Aozora Bank), and the amount of buy-back payments reached ¥894.1 billion for Shinsei Bank and ¥328.6 billion for Aozora Bank by March 31, 2012. The DICJ recovered ¥472.7 billion in non-performing loans purchased from Shinsei Bank and ¥195.2 billion in such loans purchased from Aozora Bank by March 31, 2012.With regard to the non-performing loans taken over in accordance with the above-mentioned loan buyback provision, the RCC is conducting manage-ment and collection operations on commission from the DICJ.

(ii) Management and disposal of sharesOut of the shares held by the former Long-Term Credit Bank of Japan (Shinsei Bank) and the former Nippon Credit Bank (Aozora Bank) when the special public management of both banks was terminated in 2000, the DICJ purchased those shares that are needed for both banks to continue their business, and entrusted shares to Shinsei Trust & Banking and Aozora Trust Bank, respectively. Under the share sales agreement on the transfer of both banks, these banks may buy back those shares during the 5 year trust period. However, if loss is to arise at the time of sale, the DICJ may refuse to sell them back to the banks. It was prescribed that if the buy-back of the shares was refused within 1 year before the expiry of the trust period, the period should be extended for 1 year from the date of the refusal.All of the shares purchased from Shinsei Bank and those purchased from Aozora Bank, except for the shares bought back by them, were transferred to the DICJ by February 2006 and August 2006, respec-tively, after a one-year extension of the trust period.The DICJ was proceeding with the disposal of those transferred shares in an appropriate and smooth manner with a view to completing the disposal in

about 10 years under the principles of minimizing the public burden and the impact on the market. However, in view of the government’s response to the sharp fall of the stock market in 2008, the DICJ decided to suspend the sale of exchange-listed shares for the time being, starting on October 15, 2008. The suspension of the sale of exchange-listed shares continued in FY2011 except for exceptional transac-tions, such as sale of shares in relation to a tender offer. In FY2011, the DICJ recovered a total of ¥2.5 billion, bringing the cumulative total amount recov-ered by March 31, 2012, to ¥1,715.7 billion.

III. Annex

39


ICJ’s

Operations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

Overview of shares purchased (as of March 31, 2012) (Unit: billion yen; ( ) denotes loss)

Item no.

End of March 2011 End of March 2012Comparison of end of Mar 2012 and end of Mar 2011

A) B) B) –A)

Cumulative total of book value of shares purchased ① 2,939.7 2,939.7 —

Shinsei Bank 2,269.3 2,269.3 —

Aozora Bank 670.4 670.4 —

Cumulative book value of claims recovered ② 1,376.6 1,377.6 1.0

Outstanding balance of book value = ① – ② ③ 1,563.1 1,562.0 (1.0)

(Reference)

Market value ④ 779.3 778.9 (0.4)

Latent profits/losses = ④ – ③ ⑤ (783.8) (783.1) 0.6

Breakdown of ⑤: Cumulative impairment (738.1) — —

Breakdown of ⑤: Valuation difference (45.7) — —

Cumulative profits/losses from claims recovered, etc. ⑥ 336.6 338.0 1.5

Cumulative total of claims recovered = ② + ⑥ 1,713.2 1,715.7 2.5

Notes: 1. All balances are rounded off to the nearest unit, and component items thus may not sum to the total.

2. Disposal of listed shares (excluding the shares of depository institutions receiving injections of public capital) has been entrusted to the Sumitomo Mitsui Banking Trust Bank since August 29, 2006.

3. The disposal of listed shares has in principle been suspended indefinitely as October 15, 2008.

4. The distribution of residual assets is included in the cumulative total of claims recovered.

5. (Reference) “Impairment” is a valuation method based on private-sector accounting standards used for posting losses on shares with market value whose

market value has dropped substantially (by 50% or more) from the acquisition price in those instances when it has been determined that there are no prospects for a rebound in market value. The Deposit Insurance Corporation does not itself employ such private-sector accounting standards, but estimates have been included in the separate “Administrative Cost Statement” to offer a more comprehensive understanding of the DICJ’s composition of finances.

“Valuation difference” represents the difference between the market valuation of shares with market value and their acquisition price. As with “impairment,” an estimate has been included in the “Administrative Cost Statement.”

(5) Management and Disposal of Assets Purchased from Sound Financial Institutions

(i) Outline of the systemArticle 53 of the Financial Revitalization Act provides for a system of emergency measures concerning the purchase of assets from financial institutions as a means of stabilizing and revitalizing financial functions in Japan. Upon receiving applica-tions for purchases from sound financial institutions, depository institutions under special public manage-ment, etc., in accordance with this Article, the DICJ consulted with the Purchase Price Examination Board (an advisory body to the Governor) on prices and related matters and then carried out asset purchases (as a temporary measure through the end of March 2005) with the approval of the Prime Minister (approval had previously been granted by the Financial Reconstruction Commission until its dissolution in January 2001).Thereafter, the Enterprise Turnaround Initiative Corporation of Japan Act enacted in September 2009 enabled purchases from the Enterprise Turnaround Initiative Corporation of Japan (ETIC), and the Turnaround Initiative Corporation for Business Operators in the Area of the Great East Japan Earth-

quake Act enacted in February 2012 enabled purchases from the Turnaround Initiative Corpora-tion for Business Operators in the Area of the Great East Japan Earthquake.Note: Although the Act on Arrangement of Relevant Acts

Incidental to Enforcement of the Industrial Revitalization Corporation Act enacted in April 2003 enabled purchases from the Industrial Revitalization Corporation of Japan (IRCJ), the IRCJ was dissolved in March 2007 with no submission of applications in line with this Act.

III. Annex


40

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

I. DIC

J’sO

perations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

(ii) Record of purchase and management/disposalMost of the actual operations under this system (purchase, management and disposal of assets) are entrusted to the RCC, a subsidiary of the DICJ, under agreements concluded in accordance with the provisions of Article 53 of the Financial Revitaliza-tion Act and other acts. Therefore, the DICJ provides the RCC with loans necessary for executing these operations, and it also collects profits that the RCC has earned by executing the operations. Furthermore, the DICJ provides guidance and advice regarding the operations stipulated under its agreements with the RCC.The cumulative total of assets purchased from sound financial institutions since the enforcement of the Act in 1999 is ¥4,004.1 billion in claim principal at a purchase price of ¥353.3 billion. The RCC is endeav-oring as far as possible to recover/dispose of these

purchased assets and achieve enterprise turnaround within a three-year period to minimize the burden on taxpayers [See P34: II. 2. (2) (ii)] regarding the specifics of recovery/disposal).The RCC manages assets purchased from sound financial institutions in the Article 53 account (the principal value of claims is ¥4,046 billion and the purchase value is ¥355.7 billion), together with assets purchased from banks under special public management (the principal value of claims is ¥41.9 billion and the purchase value is ¥2.4 billion) on commission from the DICJ under this scheme. The amount of claims recovered through the Article 53 account in FY2011 was ¥4.6 billion, bringing the cumulative total by March 31, 2012 to ¥689.8 billion, with the ratio of the cumulative total to the purchase value standing at 193.9%.

(6) Operations Related to the Resolution of the Failure of the Incubator Bank

The Incubator Bank failed on Friday, September 10, 2010. The DICJ is proceeding with the failure resolution as its financial administrator. The resolution of the failure of the Incubator Bank became the first case of the limited coverage since the inauguration of deposit insurance system of Japan in 1971, where deposits of up to ¥10 million in principal and interest thereon payable until the day of failure are protected per depositor. Financial assis-tance method was adopted as the means for failure resolution, and civil rehabilitation proceedings as the means for bankruptcy proceedings [See P7: I. 1. (3) (vi) 1), and P24: II. 1. (1)] regarding failure resolution under

limited coverage and protection through financial assis-tance method).The course of key events in resolving the failure of the Incubator Bank is summarized below in chronological order, with a particular focus on steps taken during FY2011.

Recovery of assets purchased under Article 53 of the Financial Revitalization Act (Unit: billion yen)

Fiscal yearOriginal

principal value of claims

Cumulative total of original principal value of claims

Purchase valueCumulative total of purchase value (A)

Total of claims collection

Cumulative total of claims collection (B)

Collection ratio(B/A)

1999 493.0 493.0 24.1 24.1 4.2 4.2 17.4%

2000 522.2 1,015.2 12.6 36.8 21.7 25.9 70.4%

2001 330.2 1,345.4 20.6 57.3 30.4 56.3 98.3%

2002 2,088.5 3,433.9 205.7 263.0 39.4 95.6 36.3%

2003 405.4 3,839.3 64.1 327.2 126.0 221.6 67.7%

2004 176.7 4,016.0 23.3 350.5 163.5 385.1 109.9%

2005 29.9 4,046.0 5.2 355.7 145.4 530.4 149.1%

2006 — 4,046.0 — 355.7 79.0 609.4 171.3%

2007 — 4,046.0 — 355.7 39.5 648.9 182.4%

2008 — 4,046.0 — 355.7 18.8 667.7 187.7%

2009 — 4,046.0 — 355.7 9.0 676.7 190.2%

2010 — 4,046.0 — 355.7 8.5 685.2 192.6%

2011 — 4,046.0 — 355.7 4.6 689.8 193.9%

Notes: 1. The figures in the table include collections of claims which DICJ purchased from banks under special public management under Article 53 of the Financial Revitalization Act. (The principal amount of claims at ¥41.9 billion and the purchase value at ¥2.4 billion.)


III. Annex

41


ICJ’s

Operations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

(i) Order that the business and assets of the Incubator Bank be placed under the management of a financial administrator, etc.On Friday, September 10, 2010, the Incubator Bank under the provisions of Article 74, paragraph 5 of the Deposit Insurance Act, submitted a written notification to the FSA Commissioner that its assets “are insufficient to honor its financial obligations.” In response, the FSA Commissioner on the same day issued an “order that the business and assets of the Incubator Bank be placed under the management of a financial administrator under the provisions of Article 74, paragraph 1 of the same act, and appointed the DICJ as the financial administrator under the provisions of Article 77, paragraph 2 of the same act. In conjunction with this, the Incubator Bank filed an application on that same date with the Tokyo District Court to begin civil rehabilitation proceedings; the court handed down a decision on the following Monday (September 13, 2010) to the effect that civil rehabilitation procedures could commence.

(ii) Name-based aggregation of deposits, the Policy Board, and the resumption of businessOver the weekend the DICJ prepared for the restart of business at the beginning of the following week by aggregating deposits held by the same party and approving a loan to the Incubator Bank at its Policy Board meeting (September 12).The Incubator Bank reopened 16 locations, including its head office, on the following Monday (September 13). Two weeks after the restart of business, all 101 locations had been reopened.

(iii) Purchase of deposits and other claimsOn December 7, 2010, the Policy Board of the DICJ decided to purchase deposits and other claims (estimated proceeds payment) at the estimated proceeds payment rate of 25% (purchase period: December 13, 2010–March 31, 2011) [See P9: I. 1. (3) (vi) 1) f.] regarding the purchases of deposits and other claims).Ultimately about 90% of uninsured deposits, held by 3,163 depositors, was purchased, with the amount of ¥2.44 billion.

(iv) Transfer of business to the 2nd BBJ and financial assistance by the DICJAs a provisional step, the business transfer of the Incubator Bank to the 2nd BBJ was implemented on April 25, 2011 (the business transfer date). The 2nd BBJ was designed to take over deposits, etc. and loan assets, etc. from a failed financial institution for the tentative maintenance and continuation of its business while a final assuming financial institution was found.For the business transfer above, the DICJ provided financial assistance to the 2nd BBJ, etc.

1) Takeover of depositsFor deposits of up to ¥10 million in principal taken over by the 2nd BBJ that were made prior to the day of failure and whose maturity dates fell after the business transfer date, it was decided to set the deposit interest rate applicable from the date of business transfer lower than the agreed interest rate on the day of deposit receipt out of concern for sound and proper operations at the 2nd BBJ and the impact that maintenance of the earlier high interest rates would have on the takeover of business by the final assuming financial institutions. Accordingly, the Incubator Bank and the 2nd BBJ sent out documents on January 17, 2011 to relevant deposi-tors, asking them whether or not they would consent to their deposits being taken over by the 2nd BBJ. If a depositor does not consent to the takeover of the deposits by the 2nd BBJ, based on the purport of the Deposit Insurance Act that up to ¥10 million in principal plus accrued interest thereon until the date of failure be protected, it was decided that the depos-itor can receive interest at the contract interest rate of the deposit date until the day of failure without applying the interest rate for the cancellation before maturity prescribed under deposit rules of the Incubator Bank.

III. Annex


42

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

I. DIC

J’sO

perations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

2) Takeover of loan claims, etc.The DICJ as the financial administrator, selected the assets that should be taken over by the 2nd BBJ from among the Incubator Bank’s loan claims and other assets to facilitate takeover of the Incubator Bank’s operations and ensure sound and proper administra-tion at the 2nd BBJ, and then requested confirmation from the FSA Commissioner that these assets were suitable as assets to be held by the 2nd BBJ under Article 93, paragraph 1 of the Deposit Insurance Act. The FSA Commissioner checked these assets against previously announced standards (in public notices from the FSA/Ministry of Finance) and confirmed in accordance with Article 93, paragraph 2 of that Act that these assets were indeed suitable as assets to be held by the 2nd BBJ.Some of the assets not taken over by the 2nd BBJ were transferred to the RCC on four separate occasions beginning from April 25, 2011, while some were sold off through bidding. Appropriate steps will be taken in future for the transfer, disposal, etc., for assets not taken over by the 2nd BBJ, the RCC or elsewhere.

3) Financial assistance by the DICJAn application for financial assistance (monetary grants, asset purchases) and equitable financial assis-tance (monetary grants) in the joint names of the Incubator Bank and the 2nd BBJ was received on April 8, 2011, and the Policy Board at its April 15, 2011 meeting decided to provide on April 25, 2011 the financial assistance described in a. and b. below; this financial assistance was subsequently provided on that date [See P8: I. 1. (3) (vi) 1) d.] regarding financial assistance and equitable financial assistance.

a. Monetary grant to the 2nd BBJ (financial assistance)…¥104.1 billion

Following a detailed examination of the figures at the time of business transfer, insured deposits were repaid and loans recovered, bringing about changes in assets and liabilities. The Policy Board at its September 27, 2011 meeting consequently decided to reduce the amount of monetary grants to ¥46 billion, and this decision went into effect on October 7, 2011.

b. Monetary grant to the Incubator Bank (equitable financial assistance) …¥65.6 billion

In view of the aforementioned changes in assets/liabilities, the Policy Board at its September 27, 2011 meeting decided to increase the amount of the monetary grant to ¥75.1 billion, and this was imple-mented on October 7, 2011. A decision on additional financial assistance (monetary grant) was also made at this same Policy Board meeting, setting the maximum increase in equitable financial assistance at ¥23.1 billion in preparation for liquidation should all of the unconfirmed liabilities among the rehabili-tation claims filed against the Incubator Bank be confirmed as liabilities.

III. Annex

43


ICJ’s

Operations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

c. Purchase of assets from the Incubator Bank (purchases entrusted to the RCC) … ¥52.9 billion

Thereafter, the following purchases of assets remain-ing at the Incubator Bank after the transfer of business were made via resolutions of the Policy Board upon receipt of applications for additional asset purchases:

2nd purchase: Resolution passed on November 22, 2011, implemented on Novem-ber 28; purchase amount: ¥14 million

3rd purchase: Resolution passed on December 6, 2011, implemented on December 19; purchase amount: ¥10 million

(v) Selection of the final assuming financial institution, etc.In selecting a final assuming financial institution, the DICJ stipulated the basic requirements demanded of a final assuming financial institution (published on March 11, 2011 in the guidelines for final assuming financial institution candidates) and following a three-stage process—(1) soliciting final assuming financial institution candidates, (2) requesting the submission of business plans and (3) requesting the submission of acceptance conditions—and strict and fair screening, the DICJ finally decided and announced on September 30, 2011 that AEON Bank had been deemed eligible and would serve as the final assuming financial institution for the Incubator Bank. On December 26, 2011, all of the outstanding shares of the 2nd BBJ, which had accepted the trans-fer of some of the Incubator Bank’s business, were transferred to AEON Bank. To ensure the transparency and fairness of the selec-tion process for a final assuming financial institution, the DICJ established the Final Assuming Financial Institution Screening Committee for the Incubator Bank as an advisory body to the Governor to provide expert advice until the final assuming financial insti-tution was selected.Additionally, in the course of carrying out the re-succession to AEON Bank, the Policy Board received an asset purchase application in the joint names of AEON Bank and the 2nd BBJ and decided at its December 19, 2011 meeting to purchase ¥429,000 in assets; this decision was implemented on December 26, 2011.

(vi) Extension of termination date for management of the Incubator BankArticle 90 of the Deposit Insurance Act provides that “financial administrators shall, within 1 year of the order to assume management, conclude its manage-ment by transferring the business of the managed financial institution and taking other such measures as necessary” but, needing more time to complete the transfer of loan claims remaining at the Incubator Bank, the DICJ as financial administrator submitted a request to the FSA Commissioner asking for a one-year extension of the termination date for management in line with the provisos of Article 90.On September 9, 2011, the DICJ received from the FSA Commissioner permission to extend the termi-nation date for management of the Incubator Bank until September 10, 2012.

(vii) Submission of schedule of depositorsThe DICJ prepared and submitted a schedule of depositors to the Tokyo District Court on May 27, 2011, the final day of the period for filing proofs of claims in the civil rehabilitation proceedings, in accordance with Article 463, paragraph 1 of the Special Corporate Reorganization Act. (Note)

Note: The civil rehabilitation proceedings require that creditors file their claims during the period for filing proofs of claims. The above submission by the DICJ of the schedule of depositors is deemed to constitute filing of deposit claims and other claims included on this schedule of depositors filed within the stipulated period for filing proofs of claims.

The schedule of depositors includes deposit claims for deposits exceeding the scope of deposit insurance protection (excluding deposits and other claims purchased <the estimated proceeds payment>), and the DICJ in principle is to carry out rehabilitation proceedings as necessary on behalf of depositors on this schedule of depositors (hereinafter, “DICJ-represented depositors”) with respect to their deposit claims in accordance with Article 466 of the Special Corporate Reorganization Act.

III. Annex


44

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

I. DIC

J’sO

perations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

(viii) Submission and approval of rehabilitation planCivil rehabilitation proceedings are designed to coordinate the interests of rehabilitation creditors, etc., and rehabilitate debtors’ businesses by estab-lishing a court-approved rehabilitation plan to revise the rights to rehabilitation claims (e.g., reduce, elimi-nate or add deterrents). The rehabilitation plan for the Incubator Bank is described as follows.

1) Submission of rehabilitation planThe Incubator Bank submitted a rehabilitation plan to the Tokyo District Court on July 27, 2011 in accordance with the procedures set out in the Civil Rehabilitation Act. This rehabilitation plan proposed that a reimbursement rate of 27% be used for the first round of reimbursement to rehabilitation credi-tors, that upon subsequent conversion of the remain-ing assets further reimbursements be made using the converted cash and the claim recovery profits gener-ated by the RCC, and that the DICJ as financial administrator pursue investigations into the responsi-bility of the Bank’s former management.

2) Request for authorization to change proposed rehabilitation plan

On October 25, 2011, the Incubator Bank submitted a request to the Tokyo District Court seeking autho-rization to make a partial change to the proposed rehabilitation plan submitted on July 27 of that year in accordance with the procedures set forth in the Civil Rehabilitation Act. The requested change to the proposed rehabilitation plan was an increase in the reimbursement rate for the first round of reimbursement to rehabilitation creditors from the initial 27% to 39%. This request was prompted by an agreement reached on the handling of large claims filed by creditors and disputed by the Incubator Bank, freeing up funds initially held in reserve pending the outcome of this dispute to be used for reimbursement to rehabilitation creditors.

3) Order of confirmation of rehabilitation planA creditors meeting organized by the Tokyo District Court was held on November 15, 2011 and, given the court’s approval of the partial change to the proposed rehabilitation plan, a resolution referred to the creditors on the proposed post-change rehabilita-tion plan was approved by a majority, upon which the court ordered confirmation of the rehabilitation plan. Public notice was provided in the Official Gazette in accordance with the procedures set forth in the Civil Rehabilitation Act and, after a period allowing for immediate appeals to be filed, the rehabilitation plan became final and binding on December 14 of that year.

(ix) Payment of tenders in 1st reimbursementThe Incubator Bank made payment of tenders in the 1st reimbursement (reimbursement rate: 39%) to rehabilitation creditors by April 2, 2012 in line with the finalized rehabilitation plan.

(x) Final settlement payment and payment of tendersThe DICJ made the decision to calculate additional payment amounts and make final settlement payment based on the difference between the tenders received from the Incubator Bank for the purchased deposit claims (reimbursement rate: 39%) and the estimated proceeds payment amount calculated using the estimated proceeds payment rate (25%). The Policy Board at its April 3, 2012 meeting then decided on the amounts of the final settlement payment (payment period: April 10–June 29, 2012) [See P9: I. 1. (3) (vi) 1) f.] with regard to final settlement payment.The DICJ proceeded to pay tenders to DICJ- represented depositors from the 1st reimbursement received on behalf of DICJ-represented depositors (payment period: from April 9, 2012).

III. Annex

45


ICJ’s

Operations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

Timeline of failure resolution of the Incubator Bank

Sep 10, 2010 (Fri) • The Incubator Bank notifies the FSA Commissioner that the Incubator Bank has insufficient assets to fully discharge its claims

• FSA orders the Incubator Bank to submit to management of its business and assets by financial administrator• FSA appoints the DICJ as financial administrator for the Incubator Bank• The Incubator Bank concludes Basic Agreement with the 2nd BBJ• The Incubator Bank files with the Tokyo District Court for the commencement of civil rehabilitation proceedings• Tokyo District Court issues temporary restraining order and supervision order

Sep 12 (Sun) • Policy Board meeting held (loans of funds for repayment of deposits, etc.)

Sep 13 (Mon) • 16 locations reopen for business• The DICJ provides loans to the Incubator Bank for the repayment of deposits, etc., • Tokyo District Court makes a decision on commencement of civil rehabilitation proceedings

Sep 16 (Thu)Sep 17 (Fri)

• Creditors meeting held

Sep 21 (Tue) • 25 more locations reopen for business (16→41 locations)

Sep 27 (Mon) • 60 more locations reopen for business (41→all 101 locations)

Dec 7 (Tue) • Policy Board meeting held (purchase of deposits and other claims <estimated proceeds payment>)

Dec 13 (Mon) • Purchase of deposits and other claims (estimated proceeds payment) begins

Dec 17 (Fri) • 20 locations consolidated (101→81 locations)

Dec 27 (Mon) • Transfer of directors

Jan 13, 2011 (Thu) • Transfer of representative executive officer, etc.

Jan 17 (Mon) • Documents sent out on takeover of the Incubator Bank deposits by the 2nd BBJ

Feb 21 (Mon) • 13 locations consolidated (81→68 locations)

Mar 11 (Fri) • Solicitation of final assuming financial institution candidates starts

Mar 31 (Thu) • Purchase period for deposits and other claims (estimated proceeds payment) ends• Solicitation of final assuming financial institution candidates ends

Apr 8 (Fri) • Deadline for reply on takeover of deposits by the 2nd BBJ

Apr 25 (Mon) • 42 locations consolidated (68→26 locations)• The Incubator Bank transfers some of its business operations to the 2nd BBJ• The DICJ provides financial assistance to the 2nd BBJ and the Incubator Bank• The RCC purchases some assets of the Incubator Bank (1st round)

May 27 (Fri) • Deadline for filing rehabilitation claims• The DICJ submits schedule of depositors to Tokyo District Court

Jul 27 (Wed) • The Incubator Bank submits proposed rehabilitation plan to Tokyo District Court

Aug 23 (Tue) • The RCC files for damages against former management of the Incubator Bank

Sep 27 (Tue) • Policy Board meeting held (financial assistance amounts changed based on detailed examination, maximum set for additional financial assistance to the Incubator Bank, etc.)

Sep 28 (Wed) • The DICJ subscribes to capital for in the 2nd BBJ

Sep 30 (Fri) • AEON Bank selected and announced as the final assuming financial institution

Nov 15 (Tue) • Creditors meeting held• Tokyo District Court approves proposed rehabilitation plan

Nov 28 (Mon) • The RCC purchases some assets of the Incubator Bank (2nd round)

Dec 9 (Fri) • The Incubator Bank sells off some claims through bidding

Dec 14 (Wed) • Order of confirmation of proposed rehabilitation plan becomes final and binding

Dec 19 (Mon) • The RCC purchases some assets of the Incubator Bank (3rd round)

Dec 26 (Mon) • All outstanding shares of the 2nd BBJ transferred to AEON Bank• The Incubator Bank transfers some loan claims to AEON Bank• The RCC purchases some assets of the 2nd BBJ

Through Apr 2, 2012 (Mon) • The Incubator Bank implements 1st reimbursement in accordance with rehabilitation plan

Apr 3 (Tue) • Policy Board meeting held (final settlement payment)

Apr 9 (Mon) • Payment of tenders to DICJ-represented depositors starts

Apr 10 (Tue) • Final settlement payment starts

III. Annex


46

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

I. DIC

J’sO

perations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

(1) Asset Investigation

Regarding the collection of loan assets held by the RCC, which is a contracted bank, the DICJ supports the RCC’s collection activity by identifying the asset concealed by malicious debtors who try to evade the repayment obliga-tion despite having sufficient financial capacity for the repayment, by way of exercising the investigative power, which is granted under the Jusen Act, the Deposit Insur-ance Act and the Financial Revitalization Act (debtors and some other specified parties face penalties for their refusal of investigations and false statements, etc.).For this purpose, the DICJ’s Special Investigation Department (Tokyo) has 2 Special Investigation Divisions and the Osaka Operation Department has 1 such divisions. These divisions are staffed not only by expert personnel but also personnel on loan from the National Tax Agency, Public Prosecutor’s Office, Police Agency and Japan Customs as well as at private-sector financial institutions.Some of the instances of asset concealment uncovered in recent asset investigations have been malicious and

sophisticated in nature, involving debtors using compa-nies of which they are the actual managers and debtors using the names of third parties in attempts to conceal assets.Facing this recent trend of asset concealment techniques becoming more malicious and sophisticated, the DICJ works to rigorously identify malicious debtor cases, including those involving antisocial forces, as required by the applicable laws, and conduct thorough asset inves-tigations by employing methods selected from a range of investigation techniques that are suited to the specific nature of individual cases. The DICJ also informs the RCC of the results of the asset investigations and provides guidance and advice to the RCC with regard to how to deal with the cases in accordance with the circumstances of the debtors and what legal actions to take.The DICJ conducted 54 asset investigations in FY2011, confirming concealed assets (“confirmed assets”) of about ¥1.3 billion. Cumulative confirmed assets since June 1996, when the DICJ was granted the authority for asset investigation, total about ¥ 733 billion.

(2) Support for Collection Operations in Difficult Recovery Cases

In removing antisocial forces illegally occupying collat-eral property, the DICJ provided support for the RCC’s collection efforts with meticulous guidance and advice, making full use of legal means, including civil execution proceedings, and taking precautionary measures to ensure the safety of collection staff in the field in cooper-ation with police as required.In cases involving malicious debtors or antisocial forces in which the property serving as collateral is enmeshed in a complex web of interests that block recovery efforts and make recovery particularly difficult, the DICJ works hand-in-hand with the RCC to deal with these matters through multifaceted application of both civil and crimi-nal laws and regulations to vigorously enforce recovery.Charges were subsequently brought against the head of the major crime syndicate Yamaguchi-gumi, who was

utilizing as an office a house that constituted property offered as collateral to the RCC, and against a construc-tion company president serving as an accomplice, for obstruction of competitive bidding, resulting in the successful recovery of claims that deprived antisocial forces of some of their funds.

(3) Pursuit of Civil Liability

In response to strong public calls that corporate manag-ers and other parties concerned who brought down finan-cial institutions or caused non-performing loans should be strictly held legally responsible, the DICJ and the RCC are pursuing their liabilities through such means as bringing civil lawsuits against them for compensation for damage financial institutions incurred.In seeking to hold the former managers of the seven former Jusen companies and failed financial institutions accountable, the DICJ pursued civil liability (manage-

3. Supporting Resolution and Collection Operations and Proper Implementation of Pursuit of Liability

Result of assets investigations

Categories FY2011 Cumulative total since June 1996

Number of investigations initiated 22 2,379

Number of ongoing investigations 54 3,432

Assets identified ¥1.3 billion ¥733.0 billion

Notes: 1. The number of ongoing investigations: the number of investigations carried over from the previous fiscal year + the number of investiga-tions initiated during the fiscal year under review.

2. Figures are rounded off.

III. Annex

47


ICJ’s

Operations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

ment liability) for the insolvencies through lawsuits or pre-suit settlement/arbitration, and civil liability (media-tor’s liability) of the financial institutions that introduced borrowers to the seven former Jusen companies. The majority of these cases entailed litigation seeking damages for violations of a good manager’s duty of good care and of good-faith operations on the part of the former management through their involvement in fraudu-lent financing. The DICJ is working to suitably resolve litigation still pending through the Liability Investigation Committee and that Committee’s Special Advisory Council, with due consideration for the DICJ’s public mission and economic rationality.The DICJ became the financial administrator for the

failed Incubator Bank in September 2010, and it under-took investigative activities to clarify the events leading up to the failure of this bank, the bank’s use of funds, etc., and to ascertain the civil and criminal liability of the former management. The findings of these investigations led the RCC, to whom the claims for damages had been transferred, filed lawsuit in August 2011 against seven members of the former management demanding ¥5 billion in damages.These efforts resulted in a cumulative total of 126 cases of lawsuits for damages against the former managers of the seven former Jusen companies and failed financial institutions by the DICJ and the RCC, seeking a total of about ¥132.1 billion in damages.

Pursuit of civil liability via litigation and conciliation (Cumulative total by March 31, 2012)

DICJ (Note 3)RCC

TotalRCB (Note 4) HLAC (Note 5) RCC (Note 6)

No. of cases

Amount claimed

(million yen)

No. of cases

Amount claimed

(million yen)

No. of cases

Amount claimed

(million yen)

No. of cases

Amount claimed

(million yen)

No. of cases

Amount claimed

(million yen)

Management liability (Note 1)

Failed financial

institution17 38,132.3 15 30,238.35 88 54,263.09 120 122,633.74

Jusen 1 3,595.00 3 900.00 4 4,495.00

Mediator’s liability (Note 2) 2 5,014.46 2 5,014.46

Total 17 38,132.3 15 30,238.35 3 8,609.46 91 55,163.09 126 132,143.20

Notes: 1. Suits that pursue the liability of former management executives (directors, executive board members, auditors and inspectors), their bereaved families, employees and others who committed jointly illicit activities at failed financial institutions and Jusen companies.

2. Suits that pursue the liability of financial institutions that mediated loans to Jusen companies.

3. Cases in which the DICJ itself filed a lawsuit as a plaintiff or was involved in a lawsuit as the financial administrator of a failed financial institution.

4. Cases in which the RCB itself filed a lawsuit as a plaintiff or took over a lawsuit that a failed financial institution had filed (except for the cases specified in Note 3).

5. Cases in which the HLAC itself filed a lawsuit as a plaintiff.

6. Cases in which the RCC itself filed a lawsuit as a plaintiff or took over a lawsuit that a failed financial institution had filed (except for the cases specified in Note 3).

7. The above figures for amounts are rounded off.

(4) Pursuit of Criminal Liability

The DICJ and the RCC have not only pursued the civil liability of former managers who had set the stage for the failure of their financial institutions through slipshod management, but have also actively filed complaints and accusations with investigative authorities on matters deemed illegal acts, and investigations are still ongoing from last fiscal year on both the criminal and civil liabil-ity of the former management of the Incubator Bank that failed in FY2010.The DICJ has similarly filed accusations (complaints) against debtors who have attempted to escape their debts through illegitimate methods. Particularly in cases involv-ing antisocial forces, the DICJ has assisted the RCC in taking strict measures against these parties by endeavoring to ascertain any illegal actions committed in the course of

recovery negotiations and providing guidance/advice to assist the filing of accusations (complaints) regarding these actions.The DICJ filed accusations (complaints) against borrow-ers in 5 cases (6 individuals) in FY2011 and, since June 1996, has filed accusations (complaints) against borrow-ers in 299 cases (591 individuals) and lenders in 38 cases (108 individuals) for a grand total of 337 cases (699 individuals).III. A

nnex


48

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

I. DIC

J’sO

perations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

Accusations/Complaints(i) Number of cases (cumulative total by March 31, 2012) (Unit: cases)

DICJ RCC HLAC RCB Total

Arrested 29 (85) 208 (427) 76 (149) 23 (37) 336 (698)

Under investigation

Other (Note 2) 1 ( 1) 1 ( 1)

Total 29 (85) 208 (427) 77 (150) 23 (37) 337 (699)

Notes: 1. The figures in parentheses represent the number of persons against whom an accusation (or a complaint) was brought.

2. Statute of limitation expired.

(ii) Breakdown of cases• From the establishment of the Special Investigation Department (June 26, 1996) to March 31, 1999 (Unit: cases)

DICJ HLAC RCB Total

Cases related to borrowers 77 (150) 14 (19) 91 (169)

Auction interference 27 ( 49) 3 ( 7) 30 ( 56)

Fraud 18 ( 44) 2 ( 2) 20 ( 46)

Obstruction of compulsory execution 15 ( 36) 4 ( 5) 19 ( 41)

False entry on notarial documents, etc. 4 ( 7) 4 ( 7)

Threat/extortion 3 ( 3) 3 ( 3)

Fraudulent bankruptcy 1 ( 1) 1 ( 1) 2 ( 2)

Other 9 ( 10) 4 ( 4) 13 ( 14)

Cases related to lenders 9 (18) 9 ( 18)

Breach of trust/aggravated breach of trust 4 (11) 4 ( 11)

Other 5 ( 7) 5 ( 7)

Total 0 77 (150) 23 (37) 100 (187)

Note: The figures in parentheses represent the number of persons against whom an accusation (or a complaint) was brought.

• From the establishment of the RCC (April 1, 1999) to March 31, 2012 (Unit: cases)

DICJ

RCC

TotalFormer Jusen claims

Transferred claims of failed financial institutions (Note 2)

Article 53 claims (Note 3)

Other (Note 4)

Cases related to borrowers (Note 5) 11 (33) 45 (86) 131 (257) 19 (43) 2 (3) 208 (422)

Auction interference 1 ( 1) 7 ( 9) 44 ( 85) 11 (25) 1 (1) 64 (121)

Fraud 4 (10) 14 (30) 33 ( 64) 3 ( 8) 54 (112)

Obstruction of compulsory execution 3 (11) 16 (34) 26 ( 52) 3 ( 8) 1 (2) 49 (107)

False entry on notarial documents, etc. 1 ( 7) 3 ( 7) 8 ( 27) 12 ( 41)

Threat/extortion 5 ( 8) 5 ( 8)

Fraudulent bankruptcy 2 ( 4) 7 ( 11) 1 ( 1) 10 ( 16)

Other 5 ( 6) 8 ( 10) 1 ( 1) 14 ( 17)

Cases related to lenders (Note 6) 18 (52) 11 ( 38) 29 ( 90)

Breach of trust/aggravated breach of trust 13 (37) 10 ( 35) 23 ( 72)

Other 5 (15) 1 ( 3) 6 ( 18)

Total 29 (85) 45 (86) 142 (295) 19 ( 43) 2 (3) 237 (512)

Notes: 1. The figures in parentheses represent the number of persons against whom an accusation (or a complaint) was brought.

2. Transferred claims of failed financial institutions include the claims transferred from the RCB.

3. Article 53 claims refer to the claims purchased from sound financial institutions under Article 53 of the Financial Revitalization Act.

4. “Other” refers to claims purchased under the Act on Special Measures concerning Business of Management and Collection of Claims.

5. In the 11 cases of the Cases related to borrowers listed in the DICJ column, the accusation was actually filed jointly by the DICJ and the RCC. However, as a matter of convenience, the number is included in the DICJ column in this table.

6. In 6 of the 11 cases of the Cases related to lenders listed in the RCB column, the accusation (or complaint) was actually filed jointly by the DICJ and the RCC. However, as a matter of convenience, the number is included in the RCC column in this table.

III. Annex

49


ICJ’s

Operations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

(iii) List of cases in which accusations or complaints were filed (FY2011)

NumberDate of

accusation/complaint

Accuser/complainant

Investigative agency Suspect Charges Contents

1

Aug 19, 2011

The RCC Hyogo Prefectural

Police

Two non-debtor third parties

Obstruction of competi-tive bidding

In the auction of real estate put up as collateral, a company whose employees were members of a crime syndicate falsely claimed to the investigating officer that the company was occupying the premises based on leasehold rights, and otherwise obstructed the competitive bidding.

2

Nov 28, 2011

The RCC Wakayama Prefectural

Police

Debtors of a failed financial institution

Obstruction of competi-tive bidding, filing/use of fabricated records in an original electronically authenticated document

In the auction of company-owned land, the accused made false statements to the investigating officer in presenting a lease agreement, evoked the name of a crime syndicate in threatening the winning bidder, and otherwise obstructed the competitive bidding.

3

Dec 15, 2011

The RCC Wakayama Prefectural

Police


Obstruction of competi-tive bidding, extortion

In the auction of company-owned land, the accused employed the intimidation of a crime syndicate to prevent the winning bidder from paying the bid price and otherwise obstructed the competitive bidding.

4

Jan 13, 2012

The RCC Aichi Prefectural

Police


Fraud (omission in reporting)

In the voluntary sale of land and structures having a revolving mortgage, the accused reported a price lower than the actual sale price and had the revolv-ing mortgage extinguished in exchange for reimbursement in that same amount.

5

Feb 28, 2012

The RCC Metropolitan Police

Department

Non-debtor third-party

Obstruction of competi-tive bidding

In the auction of land/structures occupied by a political organization for office use, the accused falsely claimed to the investigating officer that the premises were occupied based on a lease agreement with the owner, and otherwise obstructed competi-tive bidding.

Liability Investigation Committee

Executives and Debtors of Failed Financial Institutions

Investigative AuthoritiesCourt of Justice

The Resolution and Collection Corporation (RCC)

Deposit Insurance Corporation of Japan (DICJ)

Guidance and advice

ProsecutionClaim for damages

(Deposit Insurance Act, Supplement 7-I-3)(Financial Revitalization Act 53-III)

(Deposit Insurance Act, Supplement 8-I-10) (Financial Revitalization Act 54-II)


4 Special Advisors

Secretariat of the Committee

Business Planning Department Tokyo (Osaka) Division Special Counter measures Team

System for liability pursuit

The Liability Investigation Committee, which was established in February 1998 and which is chaired by the DICJ Governor, has held 105 meetings. The Special Advisors for this committee are people who formerly served as: the president of the Osaka High Court; the prosecutor general; and the president of the Japan Federation of Bar Associations; the commissioner-general of the National Police Agency. [See P16: I. 2. (2) (iii) 1)]The Liability Investigation Committee files accusations and take other actions in a rigorous and appropriate manner through the following system:

As of July 1, 2012

III. Annex


50

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

I. DIC

J’sO

perations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

(1) Operations Related to Capital Injection

The DICJ undertakes operations related to capital injec-tion into financial institutions under the acts specified on

P55: II. 4. (2), and entrusts share subscription, etc., related to the operations specified on P55–56: II. 4. (2) (i) and (ii) to the RCC. The DICJ directly subscribes for shares, etc., in relation to the operations specified on P56: II. 4. (2) (iii). [See P58: II. 4. (2) Table 1]

(i) Capital injectionThe capital injection system currently permits measures compliant with the Financial Functions Strengthening Act and the Deposit Insurance Act (financial crisis countermeasures and capital injec-tion into assuming financial institutions: permanent measures). In FY2011 a total of ¥176.5 billion in capital injections was provided to 10 entities in accordance with the Financial Functions Strengthen-ing Act, bringing the cumulative total of capital injections as of the end of FY2011 to ¥12,912.9 billion provided to 57 entities.The Financial Functions Strengthening Act was revised in July 2011 to deal with the aftermath of the Great East Japan Earthquake, maintain/strengthen financial functions throughout the afflicted region and construct a framework that would reassure depositors. [See P56: II. 4. (2) (ii)]

(ii) ManagementThe DICJ lends funds necessary for the operations of the RCC, collects profits arising from the RCC’s operations, authorizes the RCC to exercise voting and other rights as a shareholder and investor, and directly exercises its own voting rights regarding shares for which it has subscribed. In December 2008, the DICJ announced the “Basic Policy in Exercising the Voting Right as a Shareholder,” setting out its basic policy for the exercise of voting rights regarding shares acquired as a result of capital injection using public funds. The DICJ is also properly conducting management operations; for example, it holds hearings with recapitalized finan-cial institutions in a timely manner regarding their financial results, dividend policies and accumulation of retained earnings as well as capital policies, including future plans for public fund repayments.

Operations related to capital injection are divided into the following three categories:(i) Capital injection: The DICJ subscribes for shares issued by financial institutions under relevant acts.(ii) Management: The DICJ properly manages holdings of preferred shares and other capital-raising instruments.(iii) Disposal: The DICJ smoothly disposes of holdings of preferred shares and other capital-raising instruments.

Main management operations in FY2011• Exercising the voting rights at general meetings of shareholders• Holding hearings after annual and interim account settlements

Basic Policy in Exercising the Voting Right as a ShareholderFrom the viewpoint of ensuring its own interests as a shareholder, the DICJ exercises its voting rights in an appro-priate manner while giving consideration to the following points:• Does the vote contribute to maintaining the soundness of bank management?• Does the vote contribute to securing a fund source for the repayment of public funds?• Is the vote in accordance with the purposes of the act, such as facilitating finance, which constitute the basis of

capital injection using public funds?In addition, the DICJ pays attention to whether its votes are consistent with administrative policies and measures.


III. Annex

51


ICJ’s

Operations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

(iii) DisposalWith regard to the disposal of preferred shares and other capital-raising instruments held as a result of capital injection, a cumulative total of ¥10,789.6 billion worth was disposed of by March 31, 2012, while the balance of preferred shares and other capital-raising instruments held as a result of capital injection stood at ¥2,123.4 billion as of March 31, 2012. When disposing of assets in the form of preferred shares, the DICJ convenes a meeting of the “Divestment Examination Board for Preferred Shares and other Capital-Raising Instruments,” which comprises outside experts, in order to secure the appropriateness of disposal prices. [See P17: I. 2. (2) (iii) 2)]Moreover, assuming the use of a secondary offering as a means of disposal, the DICJ selects the candi-dates for the lead manager securities companies in advance through public invitation and chooses the lead manager securities company from among them on the occasion of each secondary offering so that fairness can be ensured and disposal can be imple-mented more efficiently.The DICJ carried out disposal in accordance with the “Immediate Measures on the Disposal of Preferred

Shares Subscribed for Capital Injection” announced on October 28, 2005.Specifically, the disposal of preferred shares and other instruments are in principle implemented on the basis of requests made by financial institutions into which capital was injected, in accordance with their own capital policy. Upon such request, the DICJ disposes of preferred shares and other instru-ments if it finds no particular problems with the requests from the viewpoints of: (i) avoidance of the public burden, (ii) stability of the financial system and (iii) sound management of financial institutions.However, in view of the fact that it is required to take an approach that places increased emphasis on “taxpayers’ interests” in its role of managing finan-cial assets acquired through capital injection, the DICJ disposes of shares even when it does not expect to receive a request for the disposal of shares from a financial institution after adequate negotia-tions with the financial institution, while taking care to ensure the managerial soundness of the institution and avoid an adverse impact on the market, on condition that the environment is very favorable for the disposal of the shares in light of the terms of preferred shares and stock price movement.

Main disposal operations in FY2011• The DICJ selected the candidates for the lead manager securities companies for FY2012 in March 2012.

III. Annex


52

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

I. DIC

J’sO

perations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

October 28, 2005 Deposit Insurance Corporation of Japan

Statement by the GovernorImmediate Guideline for Disposal of Preferred Shares and other Capital-Raising

Instruments Acquired through Capital Injection with Public Funds

1. The Financial Services Agency has announced today “Approaches to the Disposal of the Financial Assets (Preferred Shares and other Capital-Raising Instruments) Acquired through Capital Injections with Public Funds.” It demonstrates the concept that, with regard to the disposal of preferred shares and other capital-raising instruments acquired through the capital injections, “considering the aspect of asset management with more emphasis on the standpoint of ‘taxpayers’ interest,” there should be “a basic principle to ensure collection of profits accruing on public funds as the fruit of the stabilization of the financial system, while maintaining sound management of the Recapitalized Financial Institutions and avoiding negative impacts on markets.”The DICJ will be required “to stand prepared to take appropriate and flexible actions in view of factors includ-ing the terms of preferred shares and stock price movements at a given point in time, while continuously adher-ing to the position that the disposal is basically made on a request that each financial institution which received the capital injections (hereinafter referred to as the “Recapitalized Financial Institution(s)”) makes in accor-dance with its own capital policy,” adapting to the phase transition in relation to the Recapitalized Financial Institutions.

2. Based on the above approaches, the DICJ has revised the “Immediate Guideline for Disposal of Preferred Shares Acquired for Capital Injection to Third Parties or for Offer of Repaying the Public Funds (announced by the DICJ on July 8, 2004)” and newly published the attached “Immediate Guideline for Disposal of Preferred Shares and other Capital-Raising Instruments Acquired through Capital Injection with Public Funds” in order to demonstrate the concepts and criteria for judgments for disposing the preferred shares without any requests for repayment made by the Recapitalized Financial Institutions in addition to the guideline based on the requests for repayment by the Recapitalized Financial Institutions.

3. With changes of the circumstances, in that the sound management of the Recapitalized Financial Institutions and the market environment have improved and the possibilities of early disposal legally expected increasing, the DICJ will additionally take appropriate and flexible actions in the disposal of preferred shares, subordinated bonds, etc. (hereinafter referred to as “preferred shares”), consulting with the Recapitalized Financial Institu-tions, taking into consideration the terms of preferred shares and stock price movements, while adhering to the position that the disposal is basically made on a request that each Recapitalized Financial Institution makes in accordance with its own capital policy. In such cases, the DICJ will continue to pay full attention to maintain-ing sound management of the Recapitalized Financial Institutions and avoiding negative impacts on markets. Upon making the specific disposal, from the perspective of respecting the capital policy of each Recapitalized Financial Institution, the DICJ shall see whether there is an intention of the request for disposal of preferred shares from each Recapitalized Financial Institution in advance, and make sufficient discussion with it, based on the appropriate procedures.

III. Annex

53


ICJ’s

Operations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

October 28, 2005 Deposit Insurance Corporation of Japan

Immediate Guideline for Disposal of Preferred Shares and other Capital-Raising Instruments Acquired through Capital Injection with Public Funds

The DICJ has temporarily been adopting the guideline of disposing of preferred shares, subordinated bonds and so on (hereinafter referred to as “preferred shares”) acquired by the RCC for capital injections including the exercise of the conversion right of convertible preferred shares into common stocks which is made in expectation of selling.

1. Basic conceptWhile the soundness of the financial institutions that received the capital injections (hereinafter referred to as the “Recapitalized Financial Institution(s)”) has steadily improved since the first series of capital injections and the financial environment surrounding such institutions has been changing — for instance, they are now, in most cases, able to raise capital from private sources — it is requested that they take an approach that places more emphasis on the standpoint of “taxpayers’ interests” in their role of managing the financial assets (Preferred Shares and other Capital-Raising Instruments) acquired through capital injections.In such circumstances, while adhering to the position that the disposal is basically made on a request that each Recapitalized Financial Institution makes in accordance with its own capital policy, the DICJ will take appro-priate and flexible actions in the disposal of preferred shares, taking into account the terms of preferred shares and stock price movements at a given point in time, and paying attention to maintaining sound management of the Recapitalized Financial Institutions and avoiding negative impacts on markets.

2. When the Recapitalized Financial Institutions have requested the selling of preferred shares to third parties (including sale in the capital market)(1) Concept

The DICJ will sell preferred shares to third parties, meeting the request of the Recapitalized Financial Institutions unless there are any special problems in view of the criteria for judgment as mentioned below, including the requirement of not lowering the capital adequacy ratio in principle.While it is requested that preferred shares be fairly sold to third parties, in view of the purport that financial institutions were recapitalized by issuing preferred shares, the DICJ will give due consideration to the independence in management of the Recapitalized Financial Institutions which issued such preferred shares.In the case of selling them in the capital market, the DICJ will conduct their sale by considering stock market conditions.

(2) Criteria for judgment(i) Avoiding public costs Whether the repayment, etc., is possible at a proper value that is above the acquisition value(ii) Not damaging financial system stability Whether the proposed repayment, etc., will have any negative impacts on markets, from the viewpoint

of its method or scale, etc.(iii) Not damaging the soundness of management of the financial institution Whether there is no problem with, for instance, the progress of the plan of the financial institution for

restoring sound management, and with market evaluation, etc.

3. When the Recapitalized Financial Institution has made a request for repaying the public funds injected(1) Concept

The DICJ will meet the request for repayment unless there are any special problems in view of the criteria for judgment as mentioned below, including the requirement that the financial institution concerned can consistently ensure a satisfactory capital adequacy ratio.

(2) Criteria for judgment(i) Not damaging the soundness of management of the financial institution a. Whether the financial institution will be able to maintain its capital adequacy ratio at a sufficient

level after the repayment, etc. b. Whether there is no problem with, for instance, the progress of the plan of the financial institution

for restoring sound management, and with market evaluation, etc.

III. Annex


54

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

I. DIC

J’sO

perations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

(ii) Avoiding public costs Whether the repayment, etc., is possible at a proper value that is above the acquisition value(iii) Not damaging financial system stability Whether the proposed repayment, etc., will have any negative impacts on markets, from the viewpoint

of its method or scale, etc.

4. When it is very favorably circumstanced to make the disposals in view of the terms of the preferred shares and stock price movements(1) Concept

The DICJ will make the disposal of the preferred shares, unless there are any special problems, if it is deemed proper in view of the criteria for judgment as mentioned below, taking into consideration that it is appropriate for the DICJ to ensure collection of profits accruing on the public funds on the premise of maintaining sound management of the Recapitalized Financial Institutions and avoiding negative impacts on markets when it is considered very favorably circumstanced to sell preferred shares at that time in view of the terms of preferred shares and stock price movements, while a request from the Recapitalized Finan-cial Institution for the sale is still not expected to be offered after consultation with it.Upon making the disposal, from the perspective of respecting the capital policy of the Recapitalized Finan-cial Institution, the DICJ shall see whether there is an intention of request for disposal of preferred shares from the Recapitalized Financial Institution in advance, and make sufficient consultation with it.

(2) Criteria for judgment(i) That it can be estimated to earn profits for certain by selling the preferred shares at a fair price in view

of the terms and stock price movements of preferred shares, and that it is very favorably circum-stanced to make the disposal at that time.Note: Concerning preferred shares, if the price of the common stock is being maintained for about 30 consecutive trading days

at a price of approximately more than 150% of the conversion price, it is judged that profits are estimated to be earned certainly by making the disposal.

(ii) Not damaging financial system stability its method or scale, etc. Whether the proposed repayment, etc. will have any negative impacts on markets, from the viewpoint

of its method or scale, etc.(iii) Not damaging the soundness of management of the financial institution Whether there is no problem with, for instance, the progress of the plan of the financial institution for

restoring sound management, and with market evaluation, and so on.

The DICJ shall determine the timing and size of converting or selling of preferred shares, taking into account the timing of the revision of the convertible price, in order to avoid negative impacts on markets. It is required that the method of making the disposal and conversion of preferred shares is fair. Furthermore, upon converting (Note) or selling, the DICJ shall give due consideration to the independence of management of the Recapitalized Financial Institutions which issued them, in view of purport that the financial institu-tions were recapitalized by issuing preferred shares.

Note: The conversion is made from the perspective of asset management.

(2) Capital Injection and Disposal under Relevant Acts

(i) The former Financial Functions Stabilization Act and the Early Strengthening ActThe DICJ subscribed for shares and other capital-raising instruments worth a total of ¥10,420.9 billion, which comprised ¥1,815.6 billion in cumulative capital injected under the Act on Emergency Measures for Financial Functions Stabilization (hereinafter referred to as the“former Financial Functions Stabilization Act”) (abolished in October 1998) and ¥8,605.3 billion in cumulative capital

injected under the Act on Emergency Measures for Early Strengthening of Financial Functions (herein-after referred to as the “Early Strengthening Act”).By March 31, 2012, the DICJ received requests from various financial institutions, via the RCC, for the disposal of preferred shares and other capital-raising instruments through transfer and other means, and it approved the RCC’s applications for disposal as follows: the disposal of ¥131.0 billion in preferred shares, ¥1,180.0 billion in subordinated bonds, and ¥314.6 billion in subordinated loans out of the preferred shares and other capital-raising instruments that the DICJ subscribed for under the former Finan-

III. Annex

55


ICJ’s

Operations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

cial Functions Stabilization Act. Moreover the DICJ disposed of ¥6,585.7 billion in preferred shares, ¥954.0 billion in subordinated bonds, and ¥370.0 billion in subordinated loans, out of the preferred shares and other capital-raising instruments it subscribed for under the Early Strengthening Act. Consequently, as of March 31, 2012, the net outstanding balance of shares and other capital-raising instruments the DICJ has subscribed for after deducting the disposals made until then was ¥190.0 billion involving two financial institutions under the former Financial Functions Stabilization Act and ¥695.7 billion involving five financial institutions under the Early Strengthening Act. [See P129: III. 2. (1) i), P130: III. 2. (1) (ii)]

(ii) The Act on Organizational Restructuring and the Financial Functions Strengthening ActUnder the Act on Special Measures for Promotion of Organizational Restructuring of Financial Institu-tions (hereinafter referred to as the “Organizational Restructuring Act”), which makes it possible for financial institutions pursuing organizational restruc-turing through mergers and other means to receive public funds from the DICJ, capital injection into one financial institution worth a total of ¥6.0 billion was made and the injected public funds have already been repaid. [See P133: III. 2. (1) (iii)]In accordance with the Financial Functions Strength-ening Act, whose aim was to revitalize local econo-mies by offering public assistance to efforts being made by financial institutions to bolster financial functions in their communities and thereby contrib-ute to the maintenance of an orderly credit system and the sound development of the national economy, the DICJ had provided capital injection to 13 entities in the amount of ¥349.5 billion by the end of FY2010 through such means as subscribing preferred shares.A revised version of the Financial Functions Strengthening Act was put into force on December 17, 2008 and the deadline for applications for the subscription for shares was extended to the end of March 2012, but on July 27, 2011 a further revised Financial Functions Strengthening Act was enacted to deal with the aftermath of the Great East Japan Earthquake, maintain/strengthen financial functions throughout the afflicted region and construct a framework that would reassure depositors.Specifically, the revised Act extended the applica-tion deadline for capital participation by the govern-ment by 5 years (until March 31, 2017) and established special provisions in response to the disaster. For disaster-impacted financial institutions seeking capital participation by the government, the revised Act (1) made it clear that managerial liability

would not be pursued, (2) stated that specific targets for improvements to profitability, efficiency, etc., would not be required, and (3) stipulated that the cost of capital participation by the government would be reduced below ordinary levels, while for cooperative structured financial institutions the revised Act declared that (1) the government would work hand-in-hand with central institutions to engage in capital participation even in cooperative structured financial institutions that had themselves suffered losses in the disaster or had made consider-able loans to disaster victims and thus found it diffi-cult to project future financial conditions, (2) central institutions would assume the role of overseeing the management of disaster-afflicted financial institu-tions, and (3) funds from deposit insurance, etc., would be utilized to make it possible to dispose of participation capital should the disposal of losses carried forward become necessary in rebuilding these institutions’ businesses in future.In FY2011 capital injections of ¥30 billion and ¥35 billion respectively were provided to the Sendai Bank and the Tsukuba Bank in September 2011 (subscription for preferred shares), and one of ¥20 billion was provided to the 77 Bank in December 2011 (subordinated loan). Capital injections were also provided in the respective amounts of ¥13.9 billion and ¥17.5 billion to the Soso Shinkumi Bank and the Iwaki Shinkumi, Ltd. in January 2012 (purchase of trust beneficiary rights pertaining to preferred equity investments subscribed by the Shinkumi Federation Bank from both credit coopera-tive), in the respective amounts of ¥8.5 billion, ¥13 billion, ¥15.7 billion, and ¥17.5 billion to the Miyako Shinkin Bank, the Kesennuma Shinkin Bank, the Ishinomaki Shinkin Bank and the Abukuma Shinkin Bank in February 2012 (purchase of trust beneficiary rights pertaining to preferred equity investments subscribed by the Shinkin Central Bank from these shinkin banks), and in the amount of ¥5.4 billion to the Nasu Shinkumi Bank in March 2012 (purchase of trust beneficiary rights pertaining to preferred equity investments subscribed by the Shinkumi Federation Bank from the Nasu Shinkumi Bank).The outstanding balance of subscription, etc., based on the Financial Functions Strengthening Act until the end of March 2012 was a total of ¥526 billion provided to 23 entities. [See P134: III. 2. (1) (iv)]

(iii) The Deposit Insurance ActUnder the Deposit Insurance Act, the DICJ is autho-rized to subscribe for shares and other capital-raising instruments in order to deal with a financial crisis (Article 102, paragraph 1, item 1 of the Deposit Insurance Act). It is also authorized to subscribe for preferred shares and other capital-raising instruments

III. Annex


56

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

I. DIC

J’sO

perations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

issued by assuming financial institutions and bank holding companies, which take over business or conduct a merger (capital injection of the assuming financial institution under Article 59, paragraph 1, item 6 of the Deposit Insurance Act). [See P136-137: III. 2. (2) (i) (a) and (b)]As a measure to deal with the financial crisis, the DICJ may subscribe for shares and other capital-raising instruments issued by financial institutions if the Prime Minister recognizes the need to do so. The DICJ injected a capital of ¥1,960.0 billion into the Resona Bank, Ltd. by subscribing for preferred and common shares on June 30, 2003, after a meeting of the Financial System Management Council held on May 17, 2003. (Subsequently, these shares were exchanged for shares issued by Resona Holdings.)

At the request of Resona Holdings, the DICJ began carrying out disposals from February 2005 with authorization from the FSA Commissioner and the Minister of Finance, and these disposals currently total ¥1,248.3 billion. The outstanding balance of subscription for both ordinary shares and preferred shares as of March 31, 2012 came to ¥711.7 billion. [See P135: III. 2. (1) (v)]On the other hand, the purpose of capital injection into an assuming financial institution is to help restore its capital adequacy ratio, should the ratio decline as a result of being involved in the resolution of a failed financial institution, such as the merger with the failed institution. To date, however, no capital injection of this type has been carried out.

Since 1997, the expansion of non-performing loans in the aftermath of the bursting of the economic bubble eroded the strength of Japanese financial institutions and triggered a string of failures of financial institu-tions, seriously shaking confidence in the Japanese financial system as a whole both at home and abroad. The resulting decline in financial functions, as exemplified by banks’ perceived reluctance to lend money, was cited as a factor behind the prolonged economic stagnation in Japan and developed into a significant social problem.In order to cope with this situation, the government decided to use public funds to subscribe for shares and other capital-raising instruments issued by finan-cial institutions (public capital injection) to help restore the strength of financial institutions, restore confidence in financial institutions both at home and abroad and normalize financial functions in Japan. The former Financial Functions Stabilization Act and the Early Strengthening Act were enacted in February and October 1998, respectively, as temporary measures to deal with systemic risk (until the end of March 2001; the former Financial Functions Stabili-zation Act was abolished in October 1998), and the DICJ was called upon to undertake operations related to the injection of capital into financial institutions.Furthermore, the Deposit Insurance Act was revamped as a permanent measure in order to prepare for a potential financial crisis in the future and maintain the stability of the financial system under the limited coverage of deposit insurance, taking up capital injection to deal with a financial crisis and capital injection into assuming financial institutions

as one type of financial assistance. In addition, the Organizational Restructuring Act and the Financial Functions Strengthening Act, which absorbed a portion related to capital injections made under the Organizational Restructuring Act, were enacted as special measures valid until the end of March 2008 in order to help ensure the sound and efficient manage-ment of financial institutions, etc., and the revitaliza-tion of regional economies.In December 2008, at a time when the global finan-cial crisis was significantly affecting the management of financial institutions through sharp stock price falls in Japan and the real economy, the revised Financial Functions Strengthening Act was enacted as a special measure valid until the end of March 2012 in order to help financial institutions properly and proactively provide funds and perform the finan-cial intermediation functions as expected by small and medium-sized enterprises, etc. In July 2011, following the unprecedented earthquake, the Finan-cial Functions Strengthening Act was amended again and extended until the end of March 2017 in order to help stabilize the financial base of affected financial institutions, maintain and strengthen the financial functions in afflicted areas and protect depositors.Since February 1998, when the former Financial Functions Stabilization Act was put into force, the capital injection measures have been introduced and revised time to time. Various measures to maintain the stability of the financial system, coping with the changing conditions of the financial system and matching the financial policies, have been developed.

Column 6: What is public capital injection?

III. Annex

57


ICJ’s

Operations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

Status of capital injection into financial institutions and disposal of capital-raising instrumentsTable 1. Capital injection and disposal (as of March 31, 2012)

Applicable acts Purpose of capital injectionCapital injection implementation

(application deadline)

Former Financial Functions Stabilization Act

To maintain the stability of the financial system and promote the sound develop-ment of the national economy

March 1998(Capital injections terminated)

Early Strengthening Act To restructure the financial system and contribute to economic revitalizationMarch 1999 – March 2002

(Capital injections terminated)

Organizational Restructuring Act

To promote organizational restructuring of financial institutions and contribute to economic revitalization

September 2003(Capital injections terminated)

Financial Functions Strengthening Act

To strengthen financial functions and promotes the sound development of the national economy.

Disaster exceptions added in response to Great East Japan Earthquake (July 2011)

November 2006 – March 2012 (until end of March 2017)

Deposit Insurance Act

To maintain the stability of the financial system

Response against financial crisis (measures under item 1)

June 2003(Permanent measure)

To assist in mergers, etc.Capital injection to assuming

financial institutionsNo cases

(Permanent measure)

(Units: cases, billion yen; figures rounded off to nearest unit)

Applicable acts

Capital injection amount Current balance

Number of financial

institutions

Preferred and ordinary

shares

Trust beneficiary

rights

Subordinated bonds/loans Total

Number of financial

institutions

Preferred and ordinary

shares

Trust beneficiary

rights

Subordinated bonds/loans Total

Former Financial Functions Stabilization Act

21 321.0 — 1,494.6 1,815.6 2190.0

(130.0)— —

190.0 (130.0)

Early Strengthening Act 32 7,281.3 — 1,324.0 8,605.3 5695.7

(320.4)— —

695.7 (320.4)

Organizational Restructuring Act

1 — — 6.0 6.0 — — — — —

Financial Functions Strengthening Act

23 369.5 136.5 20.0 526.0 23 369.5 136.5 20.0 526.0

Deposit Insurance Act (Financial Crisis

Countermeasures)1

1,960.0 (296.4)

— —1,960.0 (296.4)

1711.7

(261.7)— —

711.7 (261.7)

Total 579,931.8 (296.4)

136.5 2,844.612,912.9

(296.4)28

1,966.9 (712.0)

136.5 20.02,123.4 (712.0)

Notes: • Figures inside parentheses indicate ordinary shares

• Common shares pursuant to the former Financial Functions Stabilization Act were acquired by the exercise of privilege of acquisition claims, and those pursuant to the Early Strengthening Act were acquired by mandatory acquisition.

(Unit: billion yen; figures rounded off to nearest unit)

FYDisposal Amount (book value)

Preferred and ordinary shares Trust beneficiary rights Subordinated bonds/loans Total

1999 — — 100.0 100.0

2000 200.0 — 150.0 350.0

2001 — — — —

2002 — — 674.6 674.6

2003 108.0 — 839.0 947.0

2004 786.3 (2.7) — 615.0 1,401.3 (2.7)

2005 1,934.4 — 340.0 2,274.4

2006 3,092.4 — 20.0 3,112.4

2007 102.0 — 35.0 137.0

2008 395.2 (32.0) — 51.0 446.2 (32.0)

2009 60.0 — — 60.0

2010 1,286.6 — — 1,286.6

2011 — — — —

Cumulative Amount 7,965.0 (34.7) — 2,824.6 10,789.6 (34.7)

Note: Figures inside parentheses indicate ordinary shares

III. Annex


58

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

I. DIC

J’sO

perations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

Table 2. List of capital injection/disposal/balances by financial institution (as of March 31, 2012) (Unit: billion yen)

Name of financial institutionAmount of

capital injection

(Classification) Cumulative total of disposed book value For FY2011 Balance

Type (instrument) Amount Breakdown Breakdown Breakdown

Resona HD 3,128.0Preferred Shares 2,531.6

2,256.31,921.6

——

871.7610.0

Common Shares 296.4 34.7 — 261.7Subordinated Loans 300.0 300.0 — —

Sumitomo Mitsui Trust HD 710.3

Preferred Shares 432.3

509.9

231.9

—

—(Note 4)

200.4

—Common Shares — (145.5)(Note 3) — 200.4

Subordinated Bonds 100.0 100.0 — —Subordinated Loans 178.0 178.0 — —

Shinsei Bank 416.6Preferred Shares 370.0

166.6120.0

——

(Note 5)

250.0

—Common Shares — (120.0)(Note 3) — 250.0

Subordinated Loans 46.6 46.6 — —

Aozora Bank 320.0Preferred Shares 320.0

104.7104.7

——

215.3215.3

Common Shares — (104.7)(Note 3) — —Chiba Kogyo Bank 60.0 Preferred Shares 60.0 — — — — 60.0 60.0

Kiyo HD (Kiyo Bank) 31.5 Preferred Shares 31.5 — — — — 31.5 31.5Howa Bank 9.0 Preferred Shares 9.0 — — — — 9.0 9.0

North Pacific Bank 100.0 Preferred Shares 100.0 — — — — 100.0 100.0Fukuho Bank 6.0 Preferred Shares 6.0 — — — — 6.0 6.0

Minami-Nippon Bank 15.0 Preferred Shares 15.0 — — — — 15.0 15.0Michinoku Bank 20.0 Preferred Shares 20.0 — — — — 20.0 20.0Kirayaka Bank 20.0 Preferred Shares 20.0 — — — — 20.0 20.0Daisan Bank 30.0 Preferred Shares 30.0 — — — — 30.0 30.0

Shinkumi Federation Bank(Yamanashikenmin Shinyoukumiai) 45.0 Trust Beneficiary Rights(Note 6) 45.0 — — — — 45.0 45.0

Towa Bank 35.0 Preferred Shares 35.0 — — — — 35.0 35.0Bank of Kochi 15.0 Preferred Shares 15.0 — — — — 15.0 15.0

FIDEA HD (Hokuto Bank) 10.0 Preferred Shares 10.0 — — — — 10.0 10.0Miyazaki Taiyo Bank 13.0 Preferred Shares 13.0 — — — — 13.0 13.0

Sendai Bank 30.0 Preferred Shares 30.0 — — — — 30.0 30.0Tsukuba Bank 35.0 Preferred Shares 35.0 — — — — 35.0 35.0

77 Bank 20.0 Subordinated Loans 20.0 — — — — 20.0 20.0Shinkumi Federation Bank (Soso Shinkumi Bank) 13.9 Trust Beneficiary Rights 13.9 — — — — 13.9 13.9Shinkumi Federation Bank (Iwaki Shinkumi Ltd.) 17.5 Trust Beneficiary Rights 17.5 — — — — 17.5 17.5

Shinkin Central Bank (Miyako Shinkin Bank) 8.5 Trust Beneficiary Rights 8.5 — — — — 8.5 8.5Shinkin Central Bank (Kesennuma Shinkumi) 13.0 Trust Beneficiary Rights 13.0 — — — — 13.0 13.0

Shinkin Central Bank (Ishinomaki Shinkin Bank) 15.7 Trust Beneficiary Rights 15.7 — — — — 15.7 15.7Shinkin Central Bank (Abukuma Shinkin Bank) 17.5 Trust Beneficiary Rights 17.5 — — — — 17.5 17.5

Shinkumi Federation Bank (Nasu Shinkumi Bank) 5.4 Trust Beneficiary Rights(Note 6) 5.4 — — — — 5.4 5.4

Mitsubishi UFJ FG 2,200.0Preferred Shares 1,600.0

2,200.01,600.0

——

——

Common Shares — (1,188.3)(Note 3) — —Subordinated Bonds 600.0 600.0 — —

Mizuho FG 2,949.0Preferred Shares 1,949.0

2,949.01,949.0

——

——

Subordinated Bonds 1,000.0 1,000.0 — —

Sumitomo Mitsui FG 1,501.0Preferred Shares 1,301.0

1,501.01,301.0

——

——

Common Shares — (251.0)(Note 3) — —Subordinated Bonds 200.0 200.0 — —

Sumitomo Trust & Banking 300.0Preferred Shares 100.0

300.0100.0

——

——

Subordinated Bonds 200.0 200.0 — —

Kansai Sawayaka Bank 12.0Preferred Shares 8.0

12.08.0

——

——

Subordinated Bonds 4.0 4.0 — —

Bank of Yokohama 220.0Preferred Shares 100.0

220.0100.0

——

——

Common Shares — (55.0)(Note 3) — —Subordinated Loans 120.0 120.0 — —

Wakayama Bank 12.0 Preferred Shares* 12.0 12.0 12.0 — — — —

Momiji HD 40.0Preferred Shares 20.0

40.020.0

——

——

Subordinated Loans 20.0 20.0 — —

Ashigin FG 135.0Preferred Shares 105.0

135.0105.0

——

——

Subordinated Bonds 30.0 30.0 — —Yachiyo Bank 35.0 Preferred Shares* 35.0 35.0 35.0 — — — —

Kumamoto Family Bank 30.0 Preferred Shares 30.0 30.0 30.0 — — — —Kyushu-Shinwa HD 30.0 Preferred Shares* 30.0 30.0 30.0 — — — —Kanto Tsukuba Bank 6.0 Subordinated Loans 6.0 6.0 6.0 — — — —

Hokuhoku FG 140.0Preferred Shares# 120.0

140.0120.0

——

——

Subordinated Loans 20.0 20.0 — —Bank of the Ryukyus 40.0 Preferred Shares* 40.0 40.0 40.0 — — — —

Nishi-Nippon City Bank 70.0 Preferred Shares* 70.0 70.0 70.0 — — — —Gifu Bank 12.0 Preferred Shares 12.0 12.0 12.0 — — — —

Higashi-Nippon Bank 20.0 Preferred Shares 20.0 20.0 20.0 — — — —

Total Total amount of capital injection 12,912.9Total of disposed

book value10,789.6 For FY2011 0

Total of remaining balance

2,123.4

Breakdown by type (instrument) Breakdown for amount of capital injection

Breakdown of disposed book value Breakdown for FY2011 Breakdown of total

remaining balancePreferred Shares 9,635.4 7,930.2 0 1,254.8Common Shares 296.4 (1,864.5)(Note 3) 34.7 — 712.0

Subordinated Bonds 2,134.0 2,134.0 — —Subordinated Loans 710.6 690.6 — 20.0

Trust Beneficiary Rights 136.5 — — 136.5

III. Annex

59


ICJ’s

Operations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

Notes: 1. The above figures are rounded off.

2. Of the preferred shares, ¥45.0 billion worth indicated by # (for the former Hokkaido Bank) and those indicated by * were subordinated bonds at the time of capital injection.

3. The preferred shares were converted into common shares before disposal.

4. Preferred shares were issued at the time of capital injection. The remainder of Class II preferred shares, worth ¥150 billion, and the remain-der of Class III preferred shares, worth ¥50.35 billion, were acquired by the bank as a mandatory acquisition and common shares were issued in exchange.

5. Preferred shares were issued at the time of capital injection; the remainder of the preferred shares issued under the Early Strengthening Act, worth ¥120 billion, was acquired by the bank as a mandatory acquisition on August 1, 2007, and common shares were issued in exchange.

Regarding the preferred shares issued under the former Financial Functions Stabilization Act, worth ¥96.8864 billion after the reduction of capital, the DICJ made an acquisition claim on March 31, 2008 and acquired common shares.

6. Of the trust beneficiary rights, the preferred beneficiary rights were purchased.

III. Annex


60

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

I. DIC

J’sO

perations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

(1) Posting of Public Notices by the DICJ

Based on the Criminal Accounts Damage Recovery Act, the DICJ in July 2008 started posting public notices on the procedures for the payment of damage-recovery benefits for the purpose of contributing to the prompt recovery of property damage suffered by victims of criminal acts, such as furikome fraud, in which the crimi-nal tricks a person into sending money to a designated fraudulent deposit account.The Criminal Accounts Damage Recovery Act requires

an announcement of the status of the posting of public notices at least once a year (Article 37, paragraph 2 of the act). Accordingly, on May 1, 2012, the DICJ announced the records of public notices posted in FY2011.Public notices based on the Criminal Accounts Damage Recovery Act are posted on the DICJ website dedicated to such notices (Article 27 of the act), twice per month in principle. In addition, the DICJ announces the outline of major public notices, including the number of cases and the amount of money involved.

5. Proper Implementation of Operations Related to Procedures for Criminal Accounts Damages Recovery

1) A bank account suspected to be used in crime is found

6) The financial institution requests a public notice of the payment of distribution to the DICJ

2) The financial institution takes such measures as suspending transactions regarding suspected fraudulent bank accounts

4) The DICJ makes a public notice of the forfeiture (posting it on the website of the DICJ)

Flow of procedures for the payment of damage-recovery benefits to victims and operations handled by the DICJ

3) The financial institution requests a public notice of the potential for the forfeiture of the depositors’ rights to the DICJ

• The legally prescribed period of application shall be more than 30 days and a period of more than 60 days shall be allowed for operational reason (Note 1)

7) • The DICJ makes a public notice of the payment of distribution (posting it on the website of the DICJ)

8) The financial institution determines the account of payment on an application (Note 2)

5) Elapse of a prescribed period (more than 60 days) = Forfeiture of rights (Account holders claims for deposits and others cease to exist)

10) Management of the residual property by the DICJ

Account holders are notified of the chance to exercise their rights. The account holders or victims take actions such as initiating a lawsuit and others

No actions taken Action takenSettlement via the existing

legal system such as a lawsuit

Residual property (The financial institution transfers to the DICJ.)

9) The financial institution makes the payment to the victim

Note 2: Amount of payment =

Amount of criminal damage suffered by each victim

Total amount of damage sufferedAmount of claims such as deposits and others ×

• Acertain proportion of the transferred funds is retained and appropriated for the relief of deposit account holders, etc. Under ordinances issued by relevant ministries,• The remainder, if any, is used to enhance the support for crime victims, etc. • When it becomes no longer necessary to retain the transferred funds, the retained amount is used to enhance the support for crime victims, etc.

Note 1: Out of consideration for the victims who reside in areas afflicted by the Great East Japan Earthquake of March 11, 2011, the period of application for payment has been set at 90 days for the time being regarding public notices posted on April 1, 2011, onward.

Procedures for payment

Procedures for forfeiture

III. Annex

61


ICJ’s

Operations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

(2) Three Main Public Notices Posted in FY2011

The Criminal Accounts Damage Recovery Act provides various types of public notices. The status of the main public notices that form the core of the procedures for the relief of victims posted in FY2011 is as follows.

(i) The public notice on the start of procedures for extinction of claims on bank deposit accountsThe DICJ gives this public notice at the request of a financial institution as the procedure for extinction of claims on a bank deposit account (forfeiture) when the financial institution has sufficient reason to assume that the deposit account is being used in a crime. (Article 5, paragraph 1 of the Criminal Accounts Damage Recovery Act.)The public notice sets a period of 60 days, in princi-ple, for account holders to file applications to exercise their rights. If an application is not filed within this period, the deposit and other claims become extinct (forfeiture).The public notices on the start of procedures for the extinction of claims on bank deposit accounts posted by the DICJ in FY2011 numbered 24 (against 24 in FY2010), involving 31,801 deposit accounts (against 28,923 deposit accounts in FY2010) and deposits claims worth ¥3,034 million (against ¥1,780 million in FY2010).Regarding deposit accounts forfeited under this public notice, the next step is to post a public notice on the extinction of claims on the deposits to announce the forfeiture of claims on the accounts. Subsequently, in principle, the procedure described in (ii) below is initiated to distribute the remaining claims on the deposit account. Meanwhile, regarding a deposit account for which the amount of claims is less than ¥1,000, a public notice is posted to announce that there are no distribution of claims to victims of the fraud (Article 8, paragraph 3 of the Criminal Accounts Damage Recovery Act), and the claims are transferred to the DICJ (Article 19 of the Criminal Accounts Damage Recovery Act). The public notices to announce that there will be no distribution of claims to victims of the fraud (a deposit account for which the amount of claims is less than ¥1,000) posted by the DICJ in FY2011 numbered 24 (against 23 in FY2010), involving 17,481 deposit accounts (against 15,569 deposit accounts in FY2010) and claims worth ¥8 million (against ¥7 million in FY2010).

(ii) The public notice on the start of procedures for the payment of damage-recovery benefitsThe DICJ gives this notice at the request of a finan-cial institution as the procedure for the payment of

benefits to victims from the extinct claims on depos-its (Article 11, paragraph 1 of the Criminal Accounts Damage Recovery Act).The public notice sets a period of 60 days, in princi-ple, for victims to file applications to receive the paymens.(Note) Following the lapse of this period, the financial institution pays benefits after taking the prescribed proceedings, including the decision on whether the applicant is an eligible recipient of the benefits.The public notices on the start of procedures for the payment of damage-recovery benefits posted by the DICJ in FY2011 numbered 24 (against 23 in FY2010), involving 16,243 deposit accounts (against 12,019 deposit accounts in FY2010) and deposits claims worth ¥2,086 million (against ¥1,402 million in FY2010).Note: Out of consideration for the victims who reside in areas

afflicted by the Great East Japan Earthquake of March 11, 2011, the period of application for payment has been set at 90 days for the time being regarding public notices posted on April 1, 2011, onward.

(iii) The public notice on the completion of the payment of damage-recovery benefitsThe DICJ gives this notice at the request of a finan-cial institution as the procedure after the payment of benefits (Article 18, paragraph 2 of the Criminal Accounts Damage Recovery Act).The public notice does not cover information on individual deposit accounts, but only indicates the sum of the extinct claims on deposits for which the procedure for the payment been completed, the sum of payments made to the victims and the sum of remaining claims expected to be transferred to the DICJ (Article 31 of Ordinance for the Enforcement of the Criminal Accounts Damage Recovery Act).The public notices on the completion of the payment of damage-recovery benefits posted by the DICJ in FY2011 numbered 24 (against 25 in FY2010), with the total amount of extinct deposit claims standing at ¥1,494 million (against ¥2,591 million in FY2010), the sum of payments to victims at ¥1,111 million (against ¥1,503 million in FY2010), and the sum of remaining claims expected to be transferred to the DICJ at ¥382 million (against ¥1,088 million in FY2010) (Article 19 of the Criminal Accounts Damage Recovery Act).

(3) System of Money Transfers from Financial Institutions to the DICJ and the Use of Transferred Money

(i) System of money transferFinancial institutions are required to transfer to the DICJ claims relating to a deposit account when the amount of claims (the balance in the deposit account)

III. Annex


62

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

I. DIC

J’sO

perations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

is less than ¥1,000 following the procedures for the extinction of the deposit claims, and any claims that remain after the completion of the procedures for the payment of damage-recovery benefits to victims should also be transferred to the DICJ (Article 19 of the Criminal Accounts Damage Recovery Act). In principle, the transfer of money related to cases of the extinction of claims in each quarter is performed in the following quarter.

(ii) Use of money transferredIn accordance with ordinances issued by a relevant ministry, the money transferred is to be used to enhance support for the victims of crime on the premise of setting aside funds necessary for the relief of deposit account holders (Article 20 of the Crimi-nal Accounts Damage Recovery Act).

1) Relief of the rights of deposit account holders, etc. For the ex post facto relief of deposit account holders, etc., the Criminal Accounts Damage Recov-ery Act provides that when it is recognized that there are sufficient reasons to assume that deposit accounts are not used in crimes after deposit account holders, etc. offer necessary explanations about circum-stances beyond their control that prevented them from giving notices on the exercise of their rights to financial institutions within the prescribed period or reasons for major flows of money into their deposit accounts, deposit account holders, etc. can ask finan-cial institutions to pay out the amounts equivalent to the balances of their deposit accounts. The act also provides that in cases where deposit account holders, etc. offer necessary explanations about the circum-stances beyond their control described above, when the money was put into their accounts with assets other than damaged assets, deposit account holders, etc. can ask financial institutions to pay out the amounts left after deducting the amounts equivalent to damaged assets from the balances of their deposit accounts (Article 25, paragraphs 1 and 2 of the Criminal Accounts Damage Recovery Act).The act also provides that financial institutions,

when making the payments to deposit account holders, etc. in relation to the above requests for payments, can ask the DICJ to reimburse them for the amounts equivalent to the payments made to deposit account holders, etc., after giving the notices on the payments, when they think that there were no errors or emissions in the relevant procedures taken (Article 25, paragraphs 3 and 4 of the Criminal Accounts Damage Recovery Act).Thus far, the DICJ made the payment worth ¥2,073,983 in 4 cases of the ex post facto relief of deposit account holders, etc. (as of the March 31, 2012).

2) Payments to enhance support for the victims of crimes

The Criminal Accounts Damage Recovery Act provides that money transferred to the DICJ shall be used for the enhancement of support for criminal victims as well as for the relief of the rights of deposit account holders as described above. Regard-ing specific uses of the money, an examination was made by “The Project Team on Issues Surrounding Payments to Deposit Insurance Corporation Stipu-lated in the Criminal Accounts Damage Recovery Act” (hereinafter referred to as the “Project Team”), which was established within the Financial Services Agency in September 2010. Based on the final proposals created by the Project Team, the ordinance of the competent ministry was revised to stipulate that the money shall be used for 2 businesses: “scholarship loans to children of crime victims” and “subsidies to crime victims support groups” (effec-tive from April 1, 2012). Screening was made by the Project Team to determine the operator of the business, for which Nippon Foundation, a public corporation, was selected.

(iii) Management of money transferredThe DICJ manages the money transferred by finan-cial institutions in a separate dedicated account in order to prevent the money from becoming mixed up with other funds. As of March 31, 2012, the balance of money transferred stood at ¥4,830 million.

System of money transfer

Financial institutions

(Total amounts for each quarter transferred in the following quarter)

Money transferred

Small amounts of deposits (less than ¥1,000) after the procedures for extinction of claims relating to deposit accounts

The remaining amounts after the procedures for payments of damage-recovery benefits

Enhancement of support for the victims of crime Relief of the rights of deposit account holders

III. Annex

63


ICJ’s

Operations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

(4) Status of the Utilization of Public Notices

(i) Number of accessesThe number of accesses to the DICJ’s website for public notices based on the Criminal Accounts

Damage Recovery Act in FY2011 came to some 390,000 (against some 360,000 in FY2010).The number of requests for consultations and inqui-ries from victims of crime or deposit account holders came to 698 (against 770 in FY2010).

(ii) Financial institutions coveredFinancial institutions covered by the public notice system are banks (including the Japan Post Bank and foreign banks), Shinkin Banks, Labor Banks, Credit Cooperatives, Agricultural Cooperatives, Fishery Cooperatives, Fishery Processing Cooperatives, the Norinchukin Bank, the Shoko Chukin Bank, and federations of these cooperatives (Article 2, paragraph 1 of the Criminal Accounts Damage Recovery Act). Given the inclusion of Agricultural

and Fishery Cooperatives as well as foreign banks, which are outside the deposit insurance system, a broader range of financial institutions may utilize this system than the range of financial institutions covered by the deposit insurance system (which totaled 591 entities as of April 1, 2012).Of the 1,440 deposit-taking financial institutions (as of April 1, 2012), 516 entities made use of this system in FY2011 (the number increased to 656 after the Crimi-nal Accounts Damage Recovery Act took effect).

(iii) Collection of commissionsThe DICJ collects commissions from financial insti-tutions that use the public notice system in order to cover the expenses necessary for the operations related to public notices, including system and personnel costs, with the fee amount determined by the Policy Board (Article 30 of the Criminal

Accounts Damage Recovery Act). The commissions to cover the cost of operations in FY2010 (¥159 million) were collected from financial institutions in August 2011 (the fee was set at ¥3,898 per each notice on the start of procedures for the extinction of deposit and other claims and on the start of proce-dures for the payment of damage-recovery benefits).

Number of accesses to the website in FY2011 (Unit: cases)

Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar. Total(Ref.)

FY2010

32,462 28,510 31,283 35,895 33,842 32,734 33,967 33,302 33,690 31,914 33,325 30,141 391,065 369,574

Note：Number of accesses from March 1 to 3 is not included due to a system issue.

Number of requests for consultations and inquiries in FY2011 (Unit: cases)

Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar. Total(Ref.)

FY2010

48 64 62 64 53 78 79 67 59 43 39 42 698 770

203

135

(130)

272

252

(189)

14

11

(9)

159

83

(50)

791

174

(137)

1

1

(1)

Number of financial institutions that used the system after the enactment of the law

(Number of financial institutions that used the system in FY2011)

Norinchukin B

ank A

gricultural/Fishery C

ooperatives

Banks

Shinkin Banks

Labor B

anks

Credit

Cooperatives

Shoko Chukin

Bank

Financial institutions covered and the use of the system

Number of covered financial institutions

Note: Although Fishery Processing Cooperatives are covered by the system, they are not included in the above figures since they do not take deposits.III. Annex


64

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

I. DIC

J’sO

perations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

Recognizing the importance of enabling the general public, including depositors, to correctly understand the deposit insurance system, the DICJ has devoted signifi-cant efforts to public relations activities. In FY2011, the DICJ conducted PR activities, utilizing various media in collaboration with related organizations.The following is the overview of those activities.

(1) PR Activities Utilizing Various Media

The following is the overview of the principal PR activi-ties conducted by the DICJ in FY2011.1) The DICJ thoroughly updated its website, enhancing

the information transmission function. In revising the website, emphasis was placed on making it more user-friendly for depositors and other users by renewing the design and enriching the content.

2) The DICJ increased public awareness by issuing brochures and other publications for distribution. In addition to the preparation of its own brochures, the DICJ worked together with other institutions in preparing their brochures with the aim of making the deposit insurance system better known.

3) The DICJ strove to realize correct press reporting by providing information to news media, and positively responding to their news gathering activities.

4) The DICJ exerted its efforts to enable depositors to better understand the deposit insurance system by dispatching lecturers to various training sessions and actively contributing articles to specialized journals.

5) The DICJ conducted a survey on the degree of recognition of the deposit insurance system by means of a questionnaire.

(2) Response to Inquiries

The DICJ set up dedicated telephone lines for answering inquiries concerning the deposit insurance system from the public to enable them to correctly understand the deposit insurance system, and answered a wide range of questions and inquiries from the public, including depositors.The number of inquiries totaled 2,701 in FY2011, a signif-icant year-on-year decrease of 78.9% that was due to the decrease in inquiries concerning the Incubator Bank.Most inquiries concerned “insured financial institutions,” followed by those on “maximum insurance amount,” “insured financial products,” and “purchase system and estimated proceeds payment.”

6. PR Activities to Ensure Public Awareness of the Deposit Insurance System and the DICJ’s Operations

(The DICJ’s brochure: “Understanding the Deposit Insurance System with Comics”)

(The DICJ’s brochure: “Operations of the Deposit Insurance Corporation of Japan”)(The DICJ’s website)

III. Annex

65


ICJ’s

Operations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

Number of inquiries about general matters (Number of cases)FY2007 FY2008 FY2009 FY2010 FY2011

Individual 2,193 4,661 3,885 11,273 2,162

Corporations 677 1,105 658 1,545 539

Total Number 2,870 5,766 4,543 12,818 2,701

Number of inquiries recorded by item in FY2011Category Number of cases Composition ratio (%)

1. Inquiries about the Outline of the System 420 6.5

System in general 252 3.9

Organization of the DICJ 84 1.3

Deposit insurance fund, insurance premium rate 84 1.3

2. Insurance payout; purchase of deposits 5,174 80.4

Insured financial institutions 1,116 17.4

Insured financial products 626 9.7

Insured depositor 361 5.6

Maximum insurance amount 844 13.1

Purchase of deposits; estimated proceeds payment etc. 611 9.5

Interest on deposits 400 6.2

Name-based aggregation of deposits 357 5.6

Settlement function 185 2.9

Reimbursement schedule 387 6.0

Procedures for claiming insurance payout 286 4.4

Partial payment 1 0.0

3. Financial assistance 45 0.7

4. Offsetting of deposits against borrowing 81 1.3

5. Requesting materials, other 712 11.1

Requesting materials; about the website 151 2.3

Other 561 8.7

Total by item 6,432(Note 1) 100.0(Note 2)

Notes: 1. Because in some cases one inquiry covered two or more inquiry items, the total by item does not match the total in the upper table.

2. Composition ratios by item do not add up to the total due to rounding.

III. Annex


66

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

I. DIC

J’sO

perations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

(1) Financial Conditions

The DICJ runs its operations through 9 separate accounts: the General Account, the Crisis Management Account, Account for Disposal of Claims and Debts of Specific Jusen Companies (hereinafter referred to as the “Jusen Account”), the Financial Revitalization Account, the Account for Early Strengthening of Financial Functions (hereinafter referred to as the “Early Strength-ening Account”), the Financial Functions Strengthening Account, the Damage Recovery Distribution Account, the Enterprise Turnaround Initiative Corporation Account, and the Revitalizing Earthquake-Affected Business Account. These 9 accounts were established under their respective relevant acts as follows: the General Account and the Crisis Management Account were established under the Deposit Insurance Act, the Jusen Account under the Jusen Act, the Financial Revitalization Account under the Financial Revitaliza-tion Act, the Early Strengthening Account under the Early Strengthening Act, the Financial Function Strengthening Account under the Financial Functions Strengthening Act, the Damage Recovery Distribution Account under the Criminal Accounts Damage Recovery Act, the Enterprise Turnaround Initiative Corporation Account under the Act on Enterprise Turnaround Initia-tive Corporation of Japan, and the Revitalizing Earth-quake-Affected Business Account under the Act on the

Corporation for Revitalizing Earthquake-Affected Business.The 9 accounts were established because their respective relevant acts stipulate that accounting should be separated for respective operations under special accounts. (The Deposit Insurance Act calls for separate accounting for each area of operation that is to be organized under special accounts.) Consequently, the financial results (retained loss, earned surplus, etc.) can be monitored with regard to each act (with regard to each of the general operations and crisis management opera-tions in the case of the Deposit Insurance Act).

(i) Overview of the nine accountsAs of March 31, 2012, the liability reserves of the General Account reached ¥420.5 billion. As for other accounts, in FY2011, the Crisis Management Account had an earned surplus of ¥256.6 billion; the Jusen Account cleared retained loss that stood at ¥456.5 billion on March 31, 2011, posting a earned surplus of ¥80 million; the Financial Revitalization Account registered a retained loss of ¥273.7 billion; and the Early Strengthening Account recorded an earned surplus of ¥1,560.6 billion.As in the past several years, many accounts saw their retained loss decrease or earned surplus increase. This indicates that the DICJ’s financial conditions are steadily growing stronger and more efficient.

7. Promotion of Efforts to Ensure Sound and Efficient Finances

Earned surplus/retained loss of nine accounts (Unit: billion yen; ( ) denotes loss)

Name of accountEnd of

FY2008End of

FY2009End of

FY2010End of

FY2011 Y/Y Major factors

General Account (910.5) (273.2)137.3

(Liability reserves)420.5

(Liability reserves)283.1

Insurance premium income(¥702.9 billion)

Crisis Management Account 105.8 128.2 246.4 256.6 10.1Dividends from shares held (Note 1)

(¥11.3 billion)

Jusen Account (405.6) (432.7) (456.5) 0.08 456.6Transfer from General Account (¥316.4 billion)

Financial Revitalization Account (309.1) (299.7) (287.8) (273.7) 14.0Proceeds from purchase and recovery under Article 53 (¥5.9 billion)

Early Strengthening Account 1,480.2 1,529.4 1,551.3 1,560.6 9.2Dividends from preferred shares, etc.(¥6.0 billion)

Financial Functions Strengthening Account

0.6 1 1 4.9 3.9Dividends from preferred shares (¥3.9 billion)

Damage Recovery Distribution Account

(0.1) 2.6 4.2 4.6 0.3

Enterprise Turnaround Initiative Corporation Account

(0) (0) (0) (0)

Revitalizing Earthquake-Affected Business Account (Note 2)

(0) (0)

Notes: 1. Shares in Resona Holdings.

2. This account was established on February 3, 2012 based on the provision of Article 48 of the Act on the Corporation for Revitalizing Earth-quake-Affected Business.

III. Annex

67


ICJ’s

Operations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

(ii) Financial statement by account1) General Account The General Account is used to make insurance payout and provide financial assistance up to the amount of the insurance payout cost [See P8: I. 1. (3) (vi) 1) d.] in the event of the failure of a financial institution [See P7: I. 1. (3) (vi) 1)]. The special operations account, which accounted for such operations as the provision of financial assis-tance in excess of the insurance payout cost, was abolished at the end of FY2002, and the assets and liabilities related to that account have been trans-ferred to the General Account. The General Account is funded with insurance premium revenues calculated on the basis of an insurance premium rate set so as to ensure that “the DICJ’s finances are balanced over the long term in light of an expected amount of expenses necessary for its operations and that no specific financial insti-tution receives discriminatory treatment (except for treatment made in accordance with the degree of management soundness of financial institutions),” and the difference between revenues and expenses must be set aside as liability reserves. However, any fund shortage stemming from the execution of the DICJ’s operations may be financed by borrowings or issuance of DICJ bonds. [See P73: II. 7. (2)]

Revenues in FY2011 totaled ¥1,011.2 billion, includ-ing ¥702.9 billion in insurance premium revenues from financial institutions and ¥26.8 billion in profits transferred from a contracted bank (RCC) in relation to the assets it acquired. On the other hand, expenses totaled ¥1,011.2 billion, including ¥316.4 billion in transfer to the Jusen Account, ¥283.1 billion in provisions for liability reserves, ¥232.6 billion in provisions for loan loss reserves associated with loan loss reserves set aside in relation to loans to financial institutions under management, and ¥25.0 billion in payments to the national treasury of revenues of profits transferred from a contracted bank, etc. Consequently, the General Account set aside liability reserves of ¥420.5 billion. The liability reserves set aside in the General Account increased each year until FY1994, but they started to decline in FY1995 due to the resolution of a series of failures of financial institutions. As a result, this account has been in deficit since FY1996. The retained loss expanded to ¥4,006.5 billion at the end of FY2002, but subsequently continued to decline, and in FY2010, the General Account cleared its retained loss and set aside liability reserves, despite an impact of the resolution of the failure of Incubator Bank.

Balance of liability reserves/retained loss(Unit: trillion yen)

-4.5

-4.0

-3.5

-3.0

-2.5

-2.0

-1.5

-1.0

-0.5

0.0

0.5

1.0

Note: Changes in the balance include liability reserves and retained losses in the inherited accounts.

FY1995

0.4

FY1994

0.9

FY1996

-0.4

FY1997

-0.1

FY1998

-1.2

FY1999

-1.9

FY2000

-3.1

FY2001

-3.8

FY2002

-4.0

FY2003

-3.5

FY2004

-3.0

FY2005

-2.5

FY2007

-1.4

FY2006

-1.9

FY2008

-0.9

FY2009

-0.3

FY2010

0.1

FY2011

0.4

Balances of liabilityreserve/

retained loss

(Unit: trillion yen)III. Annex


68

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

I. DIC

J’sO

perations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

2) Crisis Management AccountThis account is for accounting operations executed in response to financial crises after deliberation by the Financial System Management Council and approval by the Prime Minister (capital injections and financial assistance in excess of the insurance payout cost) and contributions from financial institu-tions. [See P10: I. 1. (3) (vi) 2)]Revenues in FY2011 totaled ¥11.5 billion, including ¥11.3 billion in dividend income from Resona Holdings shares held by the DICJ.On the other hand, expenses came to ¥1.4 billion, including interest payments on funds raised for the acquisition of Resona Holdings shares.Consequently, net profit came to ¥10.1 billion, increasing retained earnings at the end of FY2011 to ¥256.6 billion from ¥246.4 billion in FY2010.

3) Jusen AccountThis account is for operations related to the claim resolution by a contracted bank, RCC, which conducts management/collection/disposal, etc., of loan and other claims transferred from the seven former Jusen companies, including the provision of subsidies, guarantee of debts related to borrowings, and collection of transfer payments. [See P33: II. 2. (2) (i)]Revenues in FY2011 totaled ¥812.6 billion, includ-ing ¥316.4 billion transferred from the General Account, ¥69.4 billion in gains on cancellation of accounts payable arising from the cancellation of granting a promotion subsidy, and ¥1.0 billion in investment return from the Financial Stabilization Contribution Fund.On the other hand, expenses totaled ¥355.9 billion, including ¥38.2 billion in operations promotion subsidy for half of the secondary losses incurred by the RCC in FY2010 based on Article 10 of the Jusen Act.Consequently, net profit came to ¥456.6 billion by clearing retained loss that stood at ¥456.5 billion on March 31, 2011, posting an earned surplus of ¥80 million.

4) Financial Revitalization AccountThis account is for such operations as disposals related to banks under special public management [See P39: II. 2. (4)] and purchases of assets from sound institutions and other entities based on Article 53 of the Financial Revitalization Act [See P40: II. 2. (5)]. Assets and liabilities related to capital injec-tion based on the former Financial Function Stabili-zation Act (abolished on October 23, 1998) have been transferred to this account.Revenues in FY2011 totaled ¥57.3 billion, including ¥18.5 billion in asset purchase operation revenues,

such as dividend revenues from shares purchased from banks under special public management, ¥5.9 billion in revenues from the transfer of collection profit on assets which the specified contracted bank (RCC) purchased from sound financial institutions and other entities and ¥32.7 billion in the reversal of loan loss reserves.On the other hand, expenses totaled ¥43.2 billion, including ¥9.7 billion in interest payments on funds raised for the acquisition of loans in accordance with the warranty against defects and other claims purchased from banks under special public management and ¥25.7 billion transferred to loan loss reserves.Consequently, net profit came to ¥14 billion, with the retained loss at the end of FY2011 reducing to ¥273.7 billion from ¥287.8 billion in FY2010.

5) Early Strengthening AccountThis account is for such operations as the lending of funds to a contracted bank‚ RCC‚ related to capital injection based on the Early Strengthening Act. [See P55: II. 4. (2) (i)]Revenues in FY2011 totaled ¥13.8 billion, including ¥6.0 billion in transfer payments made by the contracted bank in relation to capital injection.On the other hand, expenses came to ¥4.6 billion, including interest payments on funds raised for the provision of loans to the contracted bank.Consequently, net profit came to ¥9.2 billion, increasing retained earnings at the end of FY2011 to ¥1,560.6 billion from ¥1,551.3 billion in FY2010.

6) Financial Functions Strengthening Account This account is for such operations as the lending of funds to a contracted bank‚ RCC‚ related to capital injection based on the Financial Function Strength-ening Act [See P56: II. 4. (2) (ii)].The Financial Institutions’ Management Base Strengthening Account (hereinafter referred to as the “Management Base Strengthening Account”), which had been used for such operations as the lending of funds to a contracted bank related to capital injection based on the Organizational Restructuring Act, was abolished at the end of FY2004, with its assets and liabilities transferred to this account.Revenues in FY2011 totaled ¥4.6 billion, including ¥3.9 billion in transferred profits from the contracted bank related to capital injection under the Financial Functions Strengthening Act.On the other hand, expenses came to ¥0.6 billion, including interest payments on funds raised for the provision of loans to contracted bank. Consequently, this account recorded a net profit of ¥3.9 billion, with earned surplus increasing from ¥1.0 billion as of March 31, 2011 to ¥4.9 billion.

III. Annex

69


ICJ’s

Operations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

7) Damage Recovery Distribution Account This account is for such operations as posting public notices related to the start of procedures for the extinction of claims on deposits in order to facilitate the payment of benefits to victims of criminal acts such as bank transfer fraud. [See P61: II. 5] Revenues in FY2011 totaled ¥587 million, including ¥427 million in transfer payments made by financial institutions in relation to the balance of damage-recov-ery benefits to be distributed to victims. On the other hand, expenses came to ¥203 million, including expenses necessary for such items as public notices related to the start of procedures for the extinction of claims on deposits. Consequently, net profit came to ¥384 million, with retained earnings increasing to ¥4,631 million at the end of FY2011 from ¥4,247 million in FY2010.

8) Enterprise Turnaround Initiative Corporation Account

This account is for such operations as the provision of capital to Enterprise Turnaround Initiative Corpo-ration of Japan based on the Act on Enterprise Turnaround Initiative Corporation of Japan. [See P20: I. 2. (3) (ii)] Revenues in FY2011 included only ¥180 in non-operat-ing revenue. On the other hand, expenses amounted to ¥4 million in general administrative expenses. Consequently, this account recorded a net loss of ¥4 million, with the deficit in this account increasing to ¥10 million at the end of FY2011 from ¥6 million in FY2010.

9) Revitalizing Earthquake-Affected Business Account

This account is for operations such as investing in the Corporation for Revitalizing Earthquake-Affected Business based on the Act on the Corpora-tion for Revitalizing Earthquake-Affected Business. [See P20: I. 2. (3) (iii)] Revenues in FY2011 totaled ¥140 million, including contributions for the establishment of the Corpora-tion for Revitalizing Earthquake-Affected Business. On the other hand, expenses amounted to ¥141 million, including the cost to establish the Corpora-tion for Revitalizing Earthquake-Affected Business. Consequently, net loss for FY2011 was ¥0.09 million.

III. Annex


70

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

I. DIC

J’sO

perations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

Outline of DICJ accounts (Unit: billion yen)

Account name Outline of DICJ AccountsSurplus/deficit

(–) recorded as of end of FY2011

Profit/loss (–) recorded as of end of FY2011

Main factors

General Account

• Financial assistance up to the amount of the insurance payout cost in the event of failure of financial institutions

• Lending to the contracted bank regarding purchase of assets of financial institutions under the Deposit Insurance Act

• Receipt of profit/compensation for loss regarding disposal of purchased assets of the contracted bank, etc.

• Collection of insurance premiums

420.5(Liability reserves)

283.1(Provisions for liability

reserve)

RevenuePremiumsTransfer payments by contracted bankOthers

1,011.2702.926.8

281.2

ExpensesTransfer to the governmentTransfer to the Jusen AccountTransfer to liability reserveTransfer to Loan Loss ReservesOther expenses

1,011.225.0

316.4283.1232.6154.1

Crisis Management

Account

• Measures against financial crises which are taken based on approval by the Prime Minister following deliberation by the Financial System Management Council.

• Holding preferred & common shares in Resona Holdings as a result of capital injection under the Deposit Insurance Act

256.6 10.1 RevenuesDividends from Resona Holdings sharesOthers

11.511.30.2

ExpensesNon-operating expenses (e.g., interest payment)Others

1.41.4

0

Jusen Account

• Provision of subsidies, debt guarantees for borrowings, and receipt of payments related to the claim resolution company which recover loans and other assets transferred from the seven former Jusen companies.

0.08 456.6 RevenuesInvestment return from the Financial Stabilization Contribution FundTransfer from the General AccountReversal from the Financial Stabilization Contribution FundGain on cancellation of subsidyOther revenues

812.6

1.0316.4

425.469.40.3

ExpensesOperations promotion subsidyTransfer to the Financial Stabilization Contribution FundOther expenses

355.938.2

317.50.2

Financial Revitaliza-

tion Account

• Transactions for banks under special public management (former Long-Term Credit Bank of Japan and former Nippon Credit Bank)

• Lending to the Specified Contracted Bank regarding purchase of assets from sound financial institutions under Article 53 of the Financial Revitalization Act.

• Receipt of profit/compensation for loss regarding the disposal, etc., of the purchased assets of the Specified Contracted Bank

(273.7) 14.0 RevenuesIncome from financial assistance-related businessIncome from payment by specified contracted bankReversal from loan loss reservesOthers

57.3

18.5

5.932.7

0

ExpensesNon-operating expenses (e.g., interest payment)Transfer to loan loss reservesOthers

43.29.7

25.77.8

Early Strengthen-ing Account

• Lending to the contracted bank regarding capital injection under the Early Strength-ening Act.

• Receipt of profit/compensation for loss regarding disposal of preferred shares and other capital-raising instruments held by the contracted bank.

1,560.6 9.2 RevenuesTransfer payments by contracted bankOthers

13.86.07.8


4.64.5

0

Financial Functions

Strengthen-ing Account

• Lending to the contracted bank regarding capital injection under the Financial Functions Strengthening Act.

• Receipt of profit/compensation for loss regarding disposal of preferred shares and other capital-raising instruments held by the contracted bank.

• The capital injection application deadline is the end of March 2012.

4.9 3.9 RevenuesIncome from payment by contracted bankCompensation for loss to contracted bankOthers

4.63.90.6

0


0.60.5

0

III. Annex

71


ICJ’s

Operations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

Damage Recovery

Distribution Account

• Collection of handling fees related to operations for payment of damage recovery benefits

• Collection or expenses/payment of money related to the balance of damage recovery benefits

4.6 0.3 RevenuesTransfer payment of the balance of damage recovery benefitsFee revenuesOthers

0.5

0.40.1

0

ExpensesGeneral administration expensesOthers

0.20.1

0

Enterprise Turnaround Initiative

Corporation Account

• Investments in Enterprise Turnaround Initiative Corporation based on the Act on the Enterprise Turnaround Initiative Corporation

(0) (0) Revenues 0

Expenses 0

Revitalizing Earthquake-

Affected Business Account

• Investments in the Corporation for Revital-izing Earthquake-Affected Business based on the Act on the Corporation for Revital-izing Earthquake-Affected Business

(0) (0) RevenuesContribution for the establishment of the Corporation for Revitalizing Earthquake-Affected BusinessOther revenues

0.1

0.10

ExpensesCost to establish the Corporation for Revital-izing Earthquake-Affected BusinessOther expenses

0.1

0.10

Note: The Special Operations Account, which had been used to account for special financial assistance exceeding the insurance payout cost, was abolished at the end of FY2002 (the assets and liabilities were transferred to the General Account). The Management Base Strengthening Account was abolished at the end of FY2004 (the assets and liabilities were transferred to the Financial Functions Strengthening Account).

III. Annex


72

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

I. DIC

J’sO

perations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

Outline of funding program by account (FY2012)

Account

Borrowing/issue of DICJ Bonds Government guarantee

Applicable Act

Ceiling Method (source) PurposeApplicable

Act

Appropriation in general provisions

of budget in FY2012

General Account

Deposit Insurance Act. 42 I and II

¥19 trillion (Deposit Insurance Act Order for Enforcement 2)

(1) Borrowings:(i) Financial institu-

tions and others(ii) Bank of Japan(2) DICJ bond issues

• Insurance payout• Financial assistance• Purchase of deposits and other claims• Provision of capital to establish bridge

banks• Loans, etc., to bridge banks• Loans to failed financial institutions• Others

Deposit Insurance Act 42-2

Within the limit approved by the Diet (¥19 trillion in the budget for FY2012)

Crisis Management Account

Deposit Insurance Act. 126 I

¥17 trillion (Deposit Insurance Act Order for Enforcement 29)



• Share subscription, etc., by the DICJ• Financial assistance to financial

institutions under public management• Financial assistance to banks under

special crisis management• Others

Deposit Insurance Act 126 II


Financial Revitalization Account

Financial Revitalization Act. 65 I

¥3 trillion (Financial Revitalization Act, Order for Enforcement 13)



• Asset purchase from financial institutions

• Others

Financial Revitalization Act 66


Early Strengthening Account

Early Strengthening Act.16 I

- (Note) (1) Borrowings:(i) Financial institu-


• Loans to contracted bank for subscriptions for shares, etc.

• Loss compensation for contracted bank

• Others

Early Strengthening Act 17

Within the limit approved by the Diet (Nil in the budget for FY2012)

Financial Functions Strengthening Account

Financial Functions Strengthening Act. 44 I and II

¥12 trillion (Financial Functions Strengthening Act, Order for Enforcement 33)



• Loans to contracted bank for subscriptions for shares and others and for purchasing trust beneficiary rights, etc. (including those based on the former Organizational Restructuring Act)

• Loss compensation for contracted bank, etc.

• Others

Financial Functions Strengthening Act 45


Damage Recovery Distribution Account

Criminal Accounts Damage Recovery Act. 29 I

¥390 million (Criminal Accounts Damage Recovery Act, Order for Enforcement 1)

Borrowings: Financial institutions and others

• Expenses necessary for such opera-tions as the posting of public notices on the start of procedures for extinc-tion of deposit and other claims

• Expenses necessary for such opera-tions as the posting of public notices on the start of procedures for payment of damage-recovery benefits

• Others

Note: With regard to the Early Strengthening Account, the provision of limiting the maximum amount was deleted in the Order for Enforcement of the Early Strengthening Act as amended on April 1, 2012, as neither new borrowings or issuance of DICJ bonds are projected.

(2) Funding and Investment (Fund Management)

(i) FundingRegarding deficits arising from the execution of operations, the DICJ is authorized to raise funds for each account (with the exception of the Enterprise Turnaround Initiative Corporation Account and the Revitalizing Earthquake-Affected Business Account) in the form of borrowings and/or DICJ bond issues up to the amount separately stipulated by a relevant

Cabinet Order (in the case of the Jusen Account and the Damage Recovery Distribution Account, only borrowings are allowed). Government guarantee can be provided for funding for accounts other than the Jusen Account and the Damage Recovery Distribu-tion Account under the ordinances concerning borrowings or DICJ bond issues (the upper limit on the total amount of government guarantee as stipu-lated in the general provisions of the budget was set at ¥51 trillion).

III. Annex

73


ICJ’s

Operations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

Outstanding balance of funds raised by the DICJ (Unit: billion yen; the figures in parentheses represent percentage shares)

End of FY2009 End of FY2010 End of FY2011

General Account 438.9 92.3 —

Borrowing 438.9 92.3 —

DICJ bonds — — —

Crisis Management Account 1,796.3 1,371.4 455.2

Borrowing 496.3 71.4 455.2

DICJ bonds 1,300.0 1,300.0 —

Financial Revitalization Account 1,900.8 1,879.4 1,861.0

Borrowing 250.8 229.4 211.0

DICJ bonds 1,650.0 1,650.0 1,650.0

Early Strengthening Account 1,000.0 400.0 —

Borrowing — — —

DICJ bonds 1,000.0 400.0 —

Financial Function Strengthening Account 348,7 349.0 521.6

Borrowing 348.7 69.0 241.6

DICJ bonds — 280.0 280.0

Damage Recovery Distribution Account 0.2 0.2 0.2

Borrowing 0.2 0.2 0.2

DICJ bonds

Total 5,484.9(100.0%) 4,092.3(100.0%) 2,838.0(100.0%)

Borrowing 1,534.9(28.0%) 462.3(11.3%) 908.0(32.0%)

DICJ bonds 3,950.0(72.0%) 3,630.0(88.7%) 1,930.0(68.0%)

Notes: 1. Issuance of DICJ bonds for the Early Strengthening Account started in October 1999.

2. Issuance of DICJ bonds for the General and Financial Revitalization Accounts started in April 2003.

3. Issuance of DICJ bonds for the Crisis Management Account started in April 2004.

4. The assets and liabilities of the Management Base Strengthening Account were transferred to the Financial Functions Strengthening Account on April 1, 2005.

5. Issuance of DICJ bonds for the Financial Functions Strengthening Account started in May 2010.

6. The Jusen Account, the Enterprise Turnaround Initiative Corporation Account and the Revitalizing Earthquake-Affected Business Account are excluded, as they conduct no funding activities.

The outstanding balance of funds raised by the DICJ at the end of the fiscal year peaked in FY2002, and stood at around ¥2.8 trillion at the end of FY2011.The DICJ has been making efforts to raise funds in an efficient manner by combining borrowings (up to 1 year, in principle) and issuance of DICJ bonds (with maturities of 2, 4 and 7 years) in accordance

with the length of periods during which funds are needed in light of the market environment. Conse-quently, funds raised through the issuance of DICJ bonds and borrowings account for 68% and 32%, respectively, of the outstanding balance of funds raised, which totaled around ¥2.8 trillion as of March 31, 2012.

III. Annex


74

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

I. DIC

J’sO

perations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

Trends in the outstanding balance of funds raised by the DICJ

0

5,000

10,000

15,000

20,000

25,000

30,000

15,850.2

15,850.2

16,245.0

600.0

16,845.0

17,378.6

1,800.0

19,178.6

16,378.4

3,600.0

19,978.4

14,753.6

6,120.0

20,873.6

10,879.1

9,000.0

19,879.1

4,690.4

12,180.0

16,870.4

641.6

12,150.0

12,791.6

451.0

8,850.0

9,301.0

524.4

6,450.0

6,974.4

1,522.4

4,550.0

6,072.4

1,534.9

3,950.0

5,484.9

462.3

3,630.0

4,092.3

(Unit: billion yen)

End of FY1998

End of FY1999

End of FY2000

End of FY2001

End of FY2002

End of FY2003

End of FY2004

End of FY2005

End of FY2007

End of FY2006

End of FY2008

End of FY2009

End of FY2010

908.0

1,930.0

2,838.0

Bond ratio to the claims 68%

End of FY2011

Borrowings

DICJ bonds(issuance started in October 1999)

Trends in the annual issuance of DICJ bonds

0

1,000

2,000

3,000

4,000

5,000

6,000(Unit: billion yen)

FY1999 FY2000 FY2001 FY2002 FY2003 FY2004 FY2005 FY2006 FY2008 FY2012(planned)

FY2007 FY2009 FY2010 FY2011

7-year bond

2-year bond

4-year bond

600

1,200

1,800

2,520

3,840

5,100

2,850

300200

500

1,050

780880.0

200600

1,200

1,440

1,800

1,800

2,100

1,450

300 200500

350

500

200360720

1,440

1,800

800

700

280 280.0

600.0

600

1,200

600

III. Annex

75


ICJ’s

Operations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

Outline of DICJ accounts

1999 Oct. • Commenced the issuance of bonds for the Early Strengthening Account (4-year bonds).

2001 June • Commenced the issuance of 2-year bonds for the Early Strengthening Account (from 4-year bonds to 2- or 4-year bonds).

2002 Mar. • The Bank of Japan accepted the governmental guaranteed claim on deeds to the DICJ as eligible security (assessment rate of eligible security: 80% of the outstanding principal).

Dec. • The Bank of Japan raised the assessment rate of the eligible security on deeds of which the initial claim period is less than 1 year (from 80% to 96% of the outstanding principal, and to 97% in September 2005).

2003 Apr. • Commenced the issuance of 7-year bonds for the Early Strengthening Account (from 2- to 4- year bonds to 2-, 4- or 7-year bonds).

• Commenced the issuance of 2- or 4-year bonds for the General Account and the Financial Revital-ization Account.

2004 Mar. • Commenced the borrowing of unsecured call money.

Apr. • Commenced the issuance of 4- or 7-year bonds for the Crisis Management Account.

• Changed the method of bond auction (from the Total Amount Method to the Dutch Auction on Yield Method) (Note)

Note: The Dutch Auction on Yield Method refers to accepting bids of lower yield in ascending order until reaching the expected issuance volume (the highest accepted bid yielding), and issuing bonds are subject to the terms of the highest accepted bid yielding.

2008 Sep. • Commenced the borrowings without government guarantee for the Damage Recovery Distribution Account

2009 May • Commenced the issuance of 2-year bonds for the Crisis Management Account

2010 May • Commenced the issuance of 2-year bonds for the Financial Functions Strengthening Account

Funding methods (as of the end of March 2012)

Classification Borrowings DICJ bonds

Auction method Competitive bidding Competitive bidding

Auction style Conventional style (multi-yield style)The Dutch Auction on Yield Method

(single-price style)

Funding period Up to 1 year in principle 2, 4, 7 years

Number of eligible auction participants 68 companies 17 companies

The amount of DICJ bonds issued in FY2011 decreased significantly compared to FY2010 to ¥200.0 billion. The drop is attributable mainly to redemptions of the DICJ bonds in the Early Strengthening Account as well as to the DICJ’s replacement of the issuance of long-term bonds with borrowings of 1 year or less in the Crisis Manage-ment Account, for the purpose of acting in a flexible manner even in the case of further repayment of public funds. (Decreased from ¥3,630 billion as of March 31, 2011 to ¥1,930 billion as of March 31, 2012.)The balance of outstanding borrowings increased, which is attributable to periodic fundraising conducted by the DICJ for the purpose of reinforcing

capital of the earthquake-affected special financial institutions, etc. in the Financial Function Strength-ening Account (total amount of borrowings: ¥176.5 billion), and, as explained above, the DICJ’s policy to switch the issuance of the DICJ bonds to borrow-ings in the Crisis Management Account. (Increased from ¥462.3 billion as of March 31, 2011 to ¥908.0 billion as of March 31, 2012.)In addition, the DICJ strove to continue stable and efficient funding by holding meetings with financial institutions that participate in fund-borrowing auctions to brief them on the status of the DICJ’s borrowings, thereby sharing information on the status of the DICJ’s borrowings and borrowing plans, etc.

III. Annex


76

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

I. DIC

J’sO

perations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

Interest rate on financing (for funds raised in FY2011) (Unit: %)

Borrowing rate (guaranteed by

the government)

DICJ Bond subscriber’s yield (guaranteed by government)Unsecured call

money

Borrowing rate (without government guarantee) (Damage Recovery Distribution Account)2-year bond 4-year bond 7-year bond

Average (Note) 0.117 — 0.262 — 0.116 0.396

Peak 0.145 — 0.267 — 0.116 0.489

Bottom 0.110 — 0.257 — 0.116 0.339

Note: Weight-averaged by the amount of funds raised.

Investment status of the financial stabilization contribution fund (Unit: billion yen, %)

End of FY2009 End of FY2010 End of FY2011

Balance Share Balance Share Balance Share

Total investment 907.0 100.0 907.0 100.0 800.1 100.0

Medium- and long-term bonds 906.8 100.0 568.1 62.6 0.0 0.0

Japanese Government Bonds 375.4 41.4 323.9 35.7 0.0 0.0

Government guaranteed bonds 155.1 17.1 85.1 9.4 0.0 0.0

Local government bonds 27.5 3.0 19.4 2.1 0.0 0.0

Mortgage bonds 173.4 19.1 66.8 7.4 0.0 0.0

Fiscal Investment and Loan Program agency bonds

175.3 19.3 72.8 8.0 0.0 0.0

Short-term bond, etc. 0.2 0.0 338.9 37.4 800.1 100.0

TDB 0.0 0.0 338.4 37.3 799.9 100.0

Secured call loan 0.2 0.0 0.5 0.1 0.2 0.0

Note: Since the above figures are rounded off, totals sometimes do not equal the sum of the amounts.

(Unit: billion yen, %)

FY1996 FY1997 FY1998 FY1999 FY2000 FY2001 FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011Cumulative

total

Investment return 3.9 8.0 7.9 7.2 10.5 10.8 12.6 13.8 15.7 16.0 12.7 13.4 12.3 11.3 3.6 1.1 160.7

Investment yield 0.620 0.875 0.861 0.790 1.151 1.188 1.388 1.513 1.728 1.764 1.400 1.476 1.351 1.242 0.394 0.128 1.133

Notes: 1. Figures for the investment return are rounded off.

2. The investment return represents interest receipts and profits or losses from trading and redemptions adjusted for interest receivable and is calculated on an accrual basis. Securities are evaluated at acquisition cost.

3. The investment yield is calculated by dividing the investment return by the average balance of investment funds.

4. Subsidies to the RCC are provided from realized profits not adjusted for interest receivable.

(ii) Management of surplus funds, etc.The DICJ makes investments of the Financial Stabi-lization Contribution Fund in the Jusen Account. The Financial Stabilization Contribution Fund (worth ¥1,007 billion) was established at the DICJ based on the Cabinet’s understanding “Regarding Specifica-tion of the Jusen Resolution Measures” of January 30, 1996, in order to provide capital to the claim resolution company, disburse operations promotion subsidies, and fulfill debt guarantees. The DICJ invests ¥907 billion of the above fund, which repre-sents the remainder after the deduction of ¥100 billion in capital provided to the claim resolution company, in (i) Japanese Government Bonds; (ii) government guaranteed bonds; (iii) highly rated local government bonds, general mortgage bonds and Fiscal Investment and Loan Program agency bonds;

and (iv) short-term investment vehicles, while taking care to ensure the right balance between security, profitability, and liquidity in compliance with laws and regulations. For reinvestment purposes in partic-ular, in order to cash in smoothly and securely to close the account (scheduled for June 30, 2012), the DICJ has invested mainly in highly liquid treasury discount bills (TDB).As a result, the DICJ recorded an investment return (realized profits) of ¥1.1 billion (investment yield: 0.128%) in FY2011. Accumulated investment returns from FY1996 to the end of FY2011 amounted to ¥160.7 billion (investment yield: 1.133%). Each fiscal year, the DICJ provides such investment returns (realized profits) to the RCC as operations promotion subsidies.

III. Annex

77


ICJ’s

Operations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

In addition, the DICJ strove to invest surplus funds generated in each account, focusing on safety and security in efficient fund management in compliance with the relevant laws and regulations. Specifically, the DICJ invested the funds by properly using and combining the following financial instruments while appropriately considering the use of the funds in the respective accounts: For short-term investment purposes during the period up to the time they flow out as ordinary expenditures or as funds for the redemption of DICJ bonds and the repayment of borrowings, (i) secured call loan transactions settled

on the day of contract; (ii) short-term gensaki trans-actions (purchase under resale agreement) for TDB; or (iii) outright purchases of TDB; and additionally, for longer-term investment purposes, (iv) outright purchases of interest-bearing government bonds.In investing surplus funds, the DICJ will continue efforts to ensure efficient investment while attaching importance to safety and liquidity in light of the financial situation. Furthermore, in raising funds, the DICJ will focus on stable funding to contribute to the soundness and efficiency of the financial position based on proper funding needs.

(3) Deposit Insurance Premium Rates

(i) Deposit insurance premium rates for FY20121) Change to deposit insurance premium rateBased on the DICJ’s finances, the domestic and

international conditions, and the burden of the deposit insurance premiums on financial institutions, the deposit insurance premium rate was changed in March 2012 as described below, and took effect in FY2012.

1. As from April 1, 2012, deposit insurance premium rates will be:0.082% for general deposits, etc.0.107% for deposits for payment and settlement purposes

2. In spite of the above, if, during FY2012, there is neither (i) insurance contingency (Article 49, paragragh 2, items 1 and 2 of Deposit Insurance Act); (ii) order for a financial administrator to manage the business and properties of the failed financial institution (Article 74, paragraph 1 or 2 of said Act); nor (iii) decision by the Prime Minister to take measures stipulated in Article 102, paragraph 1, item 2 or 3 of said Act, the following deposit insurance premium rates will be applied retroactively from the first day of FY2012:0.068% for general deposits, etc.0.089% for deposits for payment and settlement purposesIn such a case, the DICJ will reimburse the difference between the insurance premiums based on the above and those paid during the FY2012 in accordance with 1.above. The reimbursement will be made without interest and without delay after the end of FY2012.

Note: Effective premium rates for 1. and 2. above are 0.084% and 0.07%, respectively.

III. Annex


78

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

I. DIC

J’sO

perations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

2) Background of the change The change in the deposit insurance premium rates

was discussed based on the assumption of the following framework.

Regarding the difference of the premium rates between the deposits for payment and settlement purposes and general deposits, etc., it was deter-mined that the principle to ensure an equal premium burden for each yen of insured deposits will be maintained. Consequently, based on the trend of eligible deposits, etc., premium rates for the deposits for payment and settlement purposes and general deposits, etc. were calculated.

(ii) The Study Group on Deposit Insurance Premium RatesIn November 2011, the Study Group on Deposit Insurance Premium Rates was established with the aim of considering principles to set premium rates based on the medium- to long-term perspectives. In March 2012, a report (“Desirable Insurance Premium Rates in Future”) was prepared and publicized by the Study Group.

Members of the Study Group on Deposit Insur-ance Premium Rates (Except the chair, names are indicated in the order of the Japanese syllabary.)Chair: Naoyuki Yoshino (Professor of Economics,

Keio University) Hiroyuki Obata (Deputy Governor, Deposit Insurance Corporation of Japan)Hideki Kanda (Professor, Graduate Schools for Law and Politics, University of Tokyo)Fumio Muraoka (Director, Chairman of the Audit Committee, Toshiba Corporation)Tetsuo Morishita (Professor of Law, Sophia University Law School) Shinji Yamada (News Commentator, Japan Broadcasting Corporation, NHK)

1. Deposit insurance premium rates in the immediate future(1) Basic policyConsidering the fiscal and financial situation in Europe, etc., the current premium rate (0.084%) will be maintained for the time being (3 years) from the perspective of keeping the deposit insurance system robust as the core financial system.(2) Specific payment method of deposit insurance premiums for FY2012(i) Amount of deposit insurance premiums is calculated by multiplying the average deposit balance in the

previous fiscal year by 0.084%.(ii) Unless a failure of a financial institution occurs during the relevant fiscal year, the DICJ will refund the

amount equivalent to 0.014% at end of the fiscal year. If a financial institution fails during the fiscal year, the DICJ will not provide a refund.

(iii) In the case where it is anticipated that a sharp decline in prices in domestic and international financial markets or other types of rapid deterioration of financial markets will adversely affect the financial position of the DICJ, the DICJ will not provide a refund as referred to in (ii) above in the following fiscal year. (A refund will be given in the current fiscal year)

Note: Failure of a financial institution refers to the occurrence of an insurance contingency (Article 49, paragraph 2, items 1 and 2 of the Deposit Insurance Act), the order for management (Article 74, paragraph 1 or 2 of said Act) and measures against financial crises (Article 102, paragraph 1, item 2 or 3 of said Act).

2. Medium- to long-term deposit insurance premium ratesWith regard to liability reserves in the DICJ General Account, funds will basically be set aside for approxi-mately 10 years starting from FY2012 to a level at which no net loss such as that experienced by the DICJ in the past will occur. The principles to set premium rates for it will be discussed specifically taking into consider-ation the status of the reserves and various factors in the conditions domestically and internationally.

III. Annex

79


ICJ’s

Operations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

(1) International Cooperation

In the context of the recent global financial crisis, it was acknowledged internationally that deposit insurance systems fulfill an important role in stabilizing the finan-cial system in addition to their conventional role to protect depositors. The DICJ tracks international trends of global deposit insurance and financial mechanisms. It also proactively works with the International Association of Deposit Insurers (IADI), holds meetings and confer-ences, and aligns with overseas deposit insurance author-ities to enhance global deposit insurance systems. These activities not only have improved the Japanese deposit insurance system but have led to the stabilization of international financial systems through enhanced deposit insurance mechanisms in various countries, as Japan has disseminated our experiences with the Heisei financial crisis and other incidents in the midst of recent financial circumstances going through a rapid change.

(i) International Association of Deposit Insurers (IADI)1) OrganizationThe IADI was established in May 2002 by deposit insurance organizations and related authorities from various countries in the world to enable the enhanced collaboration of deposit insurance corporations and other organizations on a global scale and help stabi-lize financial systems. The DICJ has been a member of IADI since the Association was established, and serves as a member of its Executive Council, a decision-making body responsible for administering the IADI operations. The DICJ has also served as Chair of the Asia-Pacific Regional Committee (APRC) from the very outset. In addition since October 2011, the DICJ has been Vice Chair of the Finance and Planning Committee, an IADI standing committee that deliberates on the organization’s budget, among other tasks. Furthermore, the DICJ has dispatched one of its staff members to the IADI Secretariat in Basel as part of its contribution to IADI activities.In order to achieve its objectives, the IADI’s main activities include: i) advancing the understanding of common interests and issues related to deposit insur-ance, ii) providing guidance to enhance the effective-ness of deposit insurance systems and structures, iii) facilitating the sharing and exchange of expertise and information on deposit insurance issues through training, development, and education programs, and iv) undertaking research and providing guidance on issues relating to deposit insurance. IADI’s member-

ship has grown year by year since its establishment, and 64 organizations had joined the IADI as regular members as of the end of March 2012 (See P84[“International Association of Deposit Insurers (IADI) List of P”] for details).

A. IADI Annual General Meeting (AGM)The IADI holds an Annual General Meeting (AGM) each year, and the latest such meeting (the 10th AGM) was held in Warsaw, Poland in October 2011. The AGM comprises all members and is the IADI’s highest decision-making body. Serving as the AGM chair is Martin Gruenberg, Acting Chairman of the Federal Deposit Insurance Corporation (FDIC) of the United States.

B. Executive Council (EXCO)The Executive Council (EXCO) is the de facto decision-making body for the IADI, meeting about three times each year. The current EXCO Chair is Martin Gruenberg, Acting Chairman of the Federal Deposit Insurance Corporation (FDIC) of the United States (the previous and the first Chair was JP Sabourin, former CEO of the Canada Deposit Insur-ance Corporation). There are presently 25 seats in the EXCO, inclusive of the Chair and Vice Chair, and members are chosen via elections conducted at the AGM (term of office: 3 years). The DICJ has continually served as an EXCO member since the Council was established.

C. Standing committeesThe following standing committees (a total of six committees) have been established in the IADI to perform specific activities.❍ Standing committees (1) Governance Committee, (2) Finance and

Planning Committee (Vice Chair: DICJ), (3) Audit Committee, (4) Membership and Communications Committee, (5) Training and Conference Commit-tee, (6) Research and Guidance Committee

D. Regional committeesIn addition to the standing committees, regional committees (eight committees in total) have been established principally to reflect the characteristics and activities of each region in the activities of the Association as a whole.❍ Regional committees (eight committees) (1) Asia-Pacific (Chair: DICJ), (2) Africa, (3)

Caribbean, (4) Eurasia, (5) Europe, (6) Latin America, (7) Middle East and North Africa, (8)

8. International Cooperation and Research & Study Activities Regarding Deposit Insurance

III. Annex


80

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

I. DIC

J’sO

perations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

North America❍ IADI Asia-Pacific Regional Committee (APRC)Seizing on the opportunity offered by the expiration of the term of office of the Chair of the Asia-Pacific Regional Committee (APRC) in autumn 2011, the DICJ proposed that the next Chair be chosen through an election to ensure transparency and credibility in the APRC’s administration. An election was in fact conducted, with the result that the DICJ was selected to continue as the Chair. The DICJ has served as the APRC Chair since the IADI was founded. As the Chair organization of the APRC, the DICJ has exercised leadership in the activities in the Membership and Communications Committee, aiming at expanding membership in the Asia-Pacific region. With such efforts, DICJ has contributed to realize the increase of participation to IADI by deposit insurance organizations in this region, such as those in Australia, India, Bangladesh, Indonesia, Singapore, Thailand and Brunei.

2) Principal activities in IADIA. Core PrinciplesFollowing of the April 2008 report by the Financial Stability Forum, joint Core Principles for Effective Deposit Insurance System (Core Principles), repre-senting the internationally-agreed best practices for deposit insurance systems, were published in June 2009. In January 2011, a methodology for compli-ance assessment was announced for assessing national deposit insurance systems vis-à-vis these Core Principles. To encourage the development of deposit insurance systems consistent with the Core Principles, the following efforts were undertaken by the IADI and other international institutions (Finan-cial Stability Board (FSB), International Monetary Fund (IMF) and the World Bank.

a) Independent activitiesThe IADI has been hosting a series of workshops to assess the deposit insurance systems of individual countries/regions and determine their conformity with the Core Principles. In March 2012, the DICJ dispatched personnel to participate in the evaluation process at a workshop held to assess Malaysia’s deposit insurance system.

b) Peer reviewPeer reviews of national deposit insurance systems were conducted by the FSB using the Core Princi-ples, and a report compiling these assessments was published in February 2012. This report summarized the present status of the deposit insurance systems (the systemic revisions made during the recent finan-cial crisis and the principal features of the deposit insurance systems) in 24 FSB member countries

using the Core Principles as a benchmark, and presented the following four recommendations.

(Four recommendations)• Jurisdictions without an explicit Deposit Insurance

System (DIS) should establish one.• Jurisdictions with an explicit DIS should undertake

actions to fully align their DIS with the Core Principles.

• IADI should, in consultation with the Basel Committee on Banking Supervision (BCBS) and other relevant bodies where appropriate, update its guidance that pre-dates the financial crisis.

• The FSB should review and evaluate the actions taken by its members in response to the recom-mendations in this report.

c) Assessment by the International Monetary Fund (IMF)

Financial Sector Assessment Program (FSAP) is a program in which, if certain IMF member country voluntarily requests assessment, experts from IMF and oversight authorities assess the degree of compliance with international standards of financial regulation as well as the financial system stability of the country, and then publish the results. FSB member countries have committed to conduct FSAP every five years in an effort to comply with the 12 international standards, including the Core Principles related to the deposit insurance systems.Japan underwent an FSAP assessment from the end of 2001 and announced the outcome in September 2003. Japan asked for an FSAP update in January 2011, and discussions have since continued between the IMF mission and Japanese financial authorities toward announcing the update results at some future point. Meetings with the DICJ were also held recently.

B. Preparation of guidance, etc.The IADI is drafting Guidance Papers, primarily through its standing Research and Guidance Committee, to present rules and guidelines on individual areas/topics in deposit insurance systems in order to develop better deposit insurance systems, and it has been holding a variety of seminars to disseminate these rules and guidelines among member organizations. The DICJ is actively partici-pating in the preparation process of the Guidance Papers and seminars.

C. OutreachThere are 57 countries/regions with deposit insur-ance systems that have not joined the IADI, and expanding IADI’s membership is a matter of great urgency to improve deposit insurance systems of the

III. Annex

81


ICJ’s

Operations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

countries/regions. As the APRC Chair, the DICJ has been leading activities aimed at expanding IADI membership within the Asia-Pacific region.

(ii) International conferences, etc., hosted by DICJ1) DICJ Round TablesSince 2006 the DICJ has been holding DICJ Round Tables at which it presents challenges that deposit insurance systems could confront in the future, and conducts debates and exchanges of opinions with highly-experienced experts from overseas deposit insurance organizations who are well-versed in these challenges. The aims of these DICJ Round Tables are (1) to provide future references for DICJ opera-tions, (2) to offer information (intellectual coopera-tion) to Asian countries (particularly those just about to introduce, or having just introduced, deposit insur-ance systems), and (3) to bolster mutual collabora-tion among deposit insurance-related organizations.❍ 6th DICJ Round TableThe 6th DICJ Round Table was held in Kyoto over a two-day period in March 2012, and was attended by 24 executives and staff members from 14 deposit insurance organizations.This Round Table looked at the topic of “effective failure resolution though deposit insurance systems,” and featured presentations and subsequent lively discussions based on the experiences of individual countries/regions and the lessons learned therefrom with respect to (1) the financial crisis and the responses of individual countries/regions, (2) adequate funding levels for deposit insurance funds, (3) and risk-based premium rates for deposit insur-ance (See P86: “Program of the 6th DICJ Round Table” and “Participating Overseas Organizations.”)

2) Exchanges of viewsBriefings on DICJ activities that doubled as meetings to exchange views were held in June and December 2011 for personnel from foreign embassies and central banks posted in Japan.

(iii) Bilateral exchange and collaborationThe DICJ is undertaking the task of providing technical support for the introduction and strength-ening of deposit insurance systems, mainly in Asia, a region important for Japan from the standpoint of strengthening international relations in the economic and financial aspects. In addition to lectures overseas by executives and staff members, such cooperation has taken the form of customized training programs arranged with the collaboration of other domestic organizations (See P88: “Visits Paid and Received in Relation to International Operations”).

1) Personnel exchange with overseas deposit insurance organizations

A. Federal Deposit Insurance Corporation (FDIC, United States)

A staff member was dispatched to the Federal Deposit Insurance Corporation (FDIC, United States) in July 2011 for a period of 1 year to study bank failure resolution in the US.

B. Korea Deposit Insurance Corporation (KDIC)Personnel were dispatched to the Korea Deposit Insurance Corporation (KDIC) in May 2011 for a period of two weeks in accordance with an agree-ment on regular personnel exchange with KDIC.

Participants in 6th DICJ Round Table

III. Annex


82

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

I. DIC

J’sO

perations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

2) Cooperation with other relevant organizationsThe DICJ has been strengthening cooperative ties with related organizations overseas. Through such efforts, the DICJ improves its understanding of the deposit insurance systems of other countries and the circumstances surrounding the global financial market and strives to communicate the experiences of Japan to the deposit insurance institutions of other countries and regions. In May 2011, representatives from the Deposit Insurance of Vietnam visited the DICJ. In September of that year, the Executive Vice President of Taiwan’s Central Deposit Insurance Corporation visited the DICJ to exchange views on the current conditions and challenges facing the deposit insurance system.Also, DICJ experts have been cooperating as instruc-tors on topics pertaining to deposit insurance systems in the “Seminar on Policy Measures for Financial System Stability Development Strategy in Eastern Asian Countries,” a training program conducted by JICA each year since 2004 aimed at reinforcing the financial sector in ASEAN countries, and as well as in the seminar titled “Necessary Policy Measures and Reform Strategies for Financial System Stability in NIS Countries,” a training program held each year since 2007 aimed at drafting financial system stabili-zation policies and reform strategies for the countries of the former Soviet Union. During FY2011, trainees from ASEAN countries and the countries of the former Soviet Union visited Japan in February 2012 and attended DICJ training on such topics as “The Functions and Roles of the DICJ,” “Resolution of Financial Institution Failure,” and “The Roles of the Resolution and Collection Corporation and the Disposal of Non-performing Assets.”In February 2012, experts from the DICJ provided briefings on Japan’s deposit insurance system to personnel from China’s Ministry of Finance as part of JICA’s “Country-specific Training for the PRC Ministry of Finance.”

3) Dispatch of expert officials abroad A. International seminar commemorating 50th

anniversary of India’s Deposit Insurance and Credit Guarantee Corporation (DICGC)

In November 2011, India’s Deposit Insurance and Credit Guarantee Corporation (DICGC) and the IADI jointly hosted a seminar―“Role of Deposit Insurance in Bank Resolution Framework―Lessons from Financial Crisis” ―held in Jodhpur, India.This seminar was a joint endeavor with the IADI commemorating the 50th anniversary of the estab-lishment of India’s DICGC. Briefings on the experi-ences, present and future of the resolution of bank failures were given by representatives of the deposit insurance corporations of the host country India and other participating countries, after which discussions took place on the frameworks for bank failure resolu-tion by international organizations. The DICJ offered a presentation on the impact of the financial crisis on the deposit insurance system.

B. IADI training seminarsThe IADI held training seminars entitled “Deposit Insurance Assessments and Fund Management” in Washington, D.C. (United States) in April 2011 and in Taipei, Taiwan in November 2011.General presentations were given at both seminars on such topics as funding sources for deposit insur-ance funds, methods of collecting deposit insurance premiums, and deposit insurance fund management (funding/investment), and the DICJ made a presenta-tion to introduce Japan’s experiences. Also, the steps taken by each country/region were introduced and then discussed.

III. Annex

83


ICJ’s

Operations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

International Association of Deposit Insurers (IADI) — List of participantsI. Member organizations (Deposit insurers: 64 organizations from 63 countries/regions) (as of March 31, 2012)Asia-Pacific Regional Committee (Note 1) (17 institutions)

Australia: Australian Prudential Regulation AuthorityAzerbaijan: Azerbaijan Deposit Insurance FundBangladesh: Bangladesh BankBrunei: Brunei Darussalam Deposit Protection CorporationTaiwan: Central Deposit Insurance CorporationIndia: Deposit Insurance and Credit Guarantee CorporationJapan: Deposit Insurance Corporation of JapanVietnam: Deposit Insurance of VietnamThailand: Deposit Protection AgencyHong Kong: Hong Kong Deposit Protection BoardIndonesia: Indonesia Deposit Insurance CorporationKazakhstan: Kazakhstan Deposit Insurance FundKorea: Korea Deposit Insurance CorporationMalaysia: Malaysia Deposit Insurance CorporationPhilippines: Philippine Deposit Insurance CorporationRussia: Deposit Insurance Agency (Russia)Singapore: Singapore Deposit Insurance Corporation

North America Regional Committee (Note 2) (4 institutions)

Canada: Autorité des marchés financiers (Québec)Canada: Canada Deposit Insurance CorporationUnited States: Federal Deposit Insurance CorporationMexico: Instituto para la Protección al Ahorro Bancario

Africa Regional Committee (4 institutions)

Tanzania: Deposit Insurance Board of TanzaniaZimbabwe: Deposit Protection BoardKenya: Deposit Protection Fund BoardNigeria: Nigeria Deposit Insurance Corporation

Caribbean Regional Committee (4 institutions)

Barbados: Barbados Deposit Insurance CorporationTrinidad and Tobago: Deposit Insurance CorporationBahamas: Deposit Insurance Corporation, Central Bank of The BahamasJamaica: Jamaica Deposit Insurance Corporation

Latin America Regional Committee (Note 3) (12 institutions)

Uruguay: Banco Central del Uruguay, Superrintendencia de Protección del Ahorro BancarioGuatemala: Banco de Guatemala, como Administrador del Fondo para la Protección del AhorroEcuador: Corporación del Seguro de DepósitosParaguay: Fondo de Garantía de Depósitos, Banco Central del ParaguayNicaragua: Fondo de Garantía de Depositós de las Instituciones FinancierasVenezuela: Fondo de Garantía de Depósitos y Protección BancariaColombia: Fondo de Garantías de Instituciones FinancierasPeru: Fondo de Seguro de DepósitosBrazil: Fundo Garantidor de CréditosEl Salvador: Instituto de Garantiá de DepósitosMexico: Instituto para la Protección al Ahorro BancarioArgentina: Seguro de Depósitos Sociedad Anónima

Eurasia Regional Committee (Note 4) (4 institutions)

Azerbaijan: Azerbaijan Deposit Insurance FundUkraine: Deposit Guarantee FundKazakhstan: Kazakhstan Deposit Insurance FundRussia: Deposit Insurance Agency (Russia)

Europe Regional Committee (Note 5) (21 institutions)

Albania: Albanian Deposit Insurance AgencyPoland: Bank Guarantee FundGuernsey: Banking Deposit Compensation SchemeBulgaria: Bulgarian Deposit Insurance FundBelgium: Deposit and Financial Instrument Protection FundLiechtenstein: Deposit Guarantee and Investor Protection Foundation of the Liechtenstein Bankers AssociationUkraine: Deposit Guarantee FundRomania: Deposit Guarantee Fund in the Banking SystemRussia: Deposit Insurance Agency (Russia)Bosnia-Herzegovina: Deposit Insurance Agency of Bosnia and HerzegovinaSerbia: Deposit Insurance Agency of SerbiaCzech: Deposit Insurance Fund Czech RepublicGermany: The Deposit Protection Fund of the Association of German BanksSwitzerland: The Deposit Protection of Swiss Banks and Securities DealersFrance: Fonds de Garantie des DépôtsUnited Kingdom: Financial Services Compensation SchemeItaly: The Interbank Deposit Protection FundJersey: Jersey Bank Depositors Compensation BoardHungary: National Deposit Insurance Fund of HungaryTurkey: Savings Deposit Insurance Fund of TurkeySweden: Swedish National Debt Office

III. Annex


84

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

I. DIC

J’sO

perations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

Middle East and North Africa Regional Committee (Note 6) (5 institutions)

Morocco: Bank Al-Maghrib, Fonds Collectif de Garantie des DépôtsSudan: Bank Deposit Security Fund of SudanLebanon: Institut National de Garantie des DépôtsJordan: Jordan Deposit Insurance CorporationTurkey: Savings Deposit Insurance Fund of Turkey

Notes: 1. Azerbaijan and Kazakhstan also belong to the Eurasia Regional Committee. Russia also belongs to the Eurasia and Europe Regional Committees.

2. Mexico also belongs to the Latin America Regional Committee.

3. Mexico also belongs to the North America Regional Committee.

4. Ukraine also belongs to the Europe Regional Committee. Russia also belongs to the Asia-Pacific and Europe Regional Committees. Azerbaijan and Kazakhstan also belong to the Asia-Pacific Regional Committee.

5. Russia also belongs to the Asia-Pacific and Eurasia Regional Committees. Ukraine also belongs to the Eurasia Regional Committee. Turkey also belongs to the Middle East and North Africa Regional Committee.

6. Turkey also belongs to the Europe Regional Committee.

II. Associates (other safety net organizations from countries/regions that have developed or are considering developing a deposit insurance system: 8 entities from 8 countries/regions)

Asia Mongolia: Bank of MongoliaThailand: Bank of ThailandPhilippines: Bangko Sentral ng PilipinasSingapore: Monetary Authority of Singapore

Africa Algeria: Bank of AlgeriaMauritius: Bank of MauritiusSouth Africa: The National Treasury

Central America Virgin Islands: Ministry of Finance, Government of Virgin Islands

III. Partners (International organizations and other entities: 12 organizations)Asian Development Bank Institute

Association of Supervisors of Banks of the Americas (ASBA)

Centro de Estudios Monetarios Latinoamericanos (CEMLA)

European Bank for Reconstruction and Development

European Forum of Deposit Insurers

Inter-American Development Bank

International Monetary Fund

Office of Technical Assistance, US Department of the Treasury, International Affairs

The South East Asian Central Banks (SEACEN) Research and Training Centre

The Toronto International Leadership Centre for Financial Sector Supervision

Union of Arab Banks

World Bank

Note: The above organizations are listed in an alphabetical order.

Number of IADI participants

Category Number of countries/regions Number of entities

Member 63 64

Associate 8 8

Partner — 12

(Reference): Standing and Regional CommitteesStanding Committees Regional Committees

Governance CommitteesFinance and Planning CommitteeAudit CommitteeMembership and Communications CommitteeTraining and Conference CommitteeResearch and Guidance Committee

Asia-PacificAfricaCaribbeanEurasiaEuropeLatin AmericaMiddle East and North AfricaNorth America

III. Annex

85


ICJ’s

Operations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

Program of the 6th DICJ Round Table

Wednesday, March 7, 2012 Thursday, March 8, 2012

Morning

Opening ceremony Session 3: Adequate Funding Levels for Deposit Insurance Funds, Risk-based Premium Rates for Deposit Insurance

Opening remarks Masanori Tanabe, Governor, Deposit Insurance Corporation of

Japan Atsuhiko Ikeda, Director-General, Kinki Local Finance Bureau,

Ministry of Finance Hideo Hayakawa, General Manager, Osaka Branch, Bank of JapanKeynote address Takatoshi Kato, President, Japan Center for International Finance

(1) Taiwan David Sun Chairman, Central Deposit Insurance Corporation(2) Canada Mark Maltais Controller, Canada Deposit Insurance Corporation(3) United States Diane Ellis Deputy Director for Financial Risk Management and Research,

Division of Insurance and Research, Federal Deposit Insurance Corporation

(4) Switzerland Patrick Loeb Director, Deposit Protection of Swiss Banks and Securities Dealers(5) Korea Jong Ok Park Senior Inspector, Department of Fund Management, Korea Deposit

Insurance Corporation(6) Japan Soichi Sato, Senior Advisor, Deposit Insurance Department,


Session 1: The Financial Crisis and the Responses of Individual Countries

(1) Japan Hiroyuki Obata, Deputy Governor, Deposit Insurance Corporation

of Japan(2) United States Diane Ellis Deputy Director for Financial Risk Management and Research,


(3) United Kingdom Alex Brown Manager, Recovery and Resolution Team, Financial Services

Authority

Afternoon

Session 2: The Financial Crisis and Responses Closing ceremony

(1) Japan Kazutomi Kurihara, Executive Director, Policy Coordination

Research and International Affairs, Deposit Insurance Corporation of Japan

(2) United States Diane Ellis Deputy Director for Financial Risk Management and Research,


(3) United Kingdom Alex Brow― Manager, Recovery and Resolution Team, Financial Services

Authority(4) Russia Andrey Pekhterev Director, Planning & Strategy Development Division, Deposit

Insurance Agency (Russia)(5) India G. Gopalakrishna CEO, Deposit Insurance and Credit Guarantee Corporation(6) Philippines Valentin Araneta President, Philippine Deposit Insurance Corporation

Closing remarks Hiroyuki Obata, Deputy Governor, Deposit Insurance Corporation

of Japan

III. Annex


86

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

I. DIC

J’sO

perations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

Participating overseas organizations (15 organizations from 14 countries/regions)

Speakers

Canada Canada Deposit Insurance Corporation

United Kingdom Financial Services Authority

United States Federal Deposit Insurance Corporation

Participants

Hong Kong Hong Kong Deposit Protection Board

India Deposit Insurance and Credit Guarantee Corporation

Indonesia Indonesia Deposit Insurance Corporation

Korea Korea Deposit Insurance Corporation

Malaysia Malaysia Deposit Insurance Corporation

PhilippinesPhilippine Deposit Insurance Corporation

Banko Sentral ng Pilipinas

Russia Deposit Insurance Agency

Switzerland Deposit Protection of Swiss Banks and Securities Dealers

Taiwan Central Deposit Insurance Corporation

Thailand Deposit Protection Agency

Vietnam Deposit Insurance of Vietnam

III. Annex

87


ICJ’s

Operations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

Visits paid and received in relation to international operations(International Exchanges)• International Association of Deposit Insurers (IADI)

Date Committee Location

Apr 5–7, 2011 IADI Training Seminar US (Washington, D.C.)

May 10–12, 2011 IADI Workshop US (Washington, D.C.)

Jun 6– 9, 2011 33rd Executive Council Meeting & Research Conference Switzerland (Basel)

Oct 17–21, 2011 IADI 10th Annual General Meeting, 34th Executive Council Meeting, etc. Poland (Warsaw)

Nov 13–16, 2011 IADI –DICGC (India) Seminar Commemorating 50th Anniversary of DICGC India (Jodhpur)

Nov 15–17, 2011 IADI Training Seminar Taiwan (Taipei)

Feb 21–23, 2012 35th Executive Council Meeting, Standing Committee Meetings, etc. Turkey (Istanbul)

Mar 26 – 29, 2012 IADI Training Seminar Malaysia (Kuala Lumpur)

• Personnel exchange with deposit insurance organizations overseas

Date

May 22–Jun 3, 2011 Dispatch of personnel to Korea Deposit Insurance Corporation

Approx. 1 year from Jul 2011

Dispatch of personnel to Federal Deposit Insurance Corporation

• Visits to related overseas organizations

Date Objective Location

Sep 21–22, 2011 Exchange of views with deposit insurance organizations in Asian countries Philippines (Manila), Hong Kong

Sep 25–Oct 1, 2011 Exchange of views with deposit insurance organizations in Asian countries

Korea (Seoul), Taiwan (Taipei), Vietnam (Hanoi), Thailand (Bangkok), Singapore (Singapore), Indonesia (Jakarta), Malaysia (Kuala Lumpur)

Oct 10–13, 2011Exchange of views with Financial Services Authority (UK), Financial Services Compensation Scheme (UK), and Federal Deposit Insurance Corporation (US)

UK (London), US (Washington, D.C.)

• Acceptance of research groups from abroad

Date Visitor

May 13, 2011 Deposit Insurance of Vietnam

Sep 14–15, 2011 Central Deposit Insurance Corporation (Taiwan)III. A

nnex


88

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

I. DIC

J’sO

perations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

(Technical assistance)• Sending expert officials abroad

Date Purpose Location

Apr 5–7, 2011 IADI Training Seminar US (Washington, D.C.)

Nov 13–16, 2011 IADI –DICGC (India) Seminar Commemorating 50th Anniversary of DICGC India (Jodhpur)

Nov 15–17, 2011 IADI Training Seminar Taiwan (Taipei)

• Acceptance of trainees from overseas

Date Visitor Organizer/name of training

Feb 2, 2012 Government/central bank personnel from East Asian countries Japan International Cooperation Agency (JICA)

Feb 22, 2012 Government/central bank personnel from countries of the former Soviet Union Japan International Cooperation Agency (JICA)

Feb 24, 2012 Personnel from PRC Ministry of Finance Japan International Cooperation Agency (JICA)

(2) Research & Study Activities

(i) Recent activitiesThe DICJ conducts research and studies on interna-tional developments related to the deposit insurance system as well as various practical and legal problems in order to ensure appropriate operations.In FY2011, prioritized research was conducted on deposit insurance systems and failure resolution trends in the US and Europe, the progress of interna-tional discussions on financial regulations and super-vision at the G20 and the Financial Stability Board (FSB), etc. The results of these research efforts were disseminated widely through the publication of a research journal (see ii. below) and other means.

(ii) Publication of the journal (“Deposit Insurance Review”)In March 2004, the DICJ started to issue the journal “Deposit Insurance Review,” to make public the results of research. The DICJ published No. 13 in May 2011 and No. 14 in May 2012.

Articles and materials contained in the DICJ research and study journal “Deposit Insurance Review”❍ No. 13 (May 2011)• Financial crises and deposit insurance system—

Nihon Keizai Shimbun Seminar (November 5–22, 2010)

• The FDIC after passage of financial regulatory reform law (Dodd-Frank Act)

• Trends in financial regulatory reform in Europe—regulation, safety nets, resolution scheme

• (Document analysis) Core principles for effective deposit insurance systems: A methodology for compliance assessment

❍ No.14 (May 2012)• History and challenges of deposit insurance systems• International trends in the structure of macropru-

dential policy• Deposit insurance systems after Lehman Shock• (Report) Desirable Insurance Premium Rates

in Future

III. Annex

89


ICJ’s

Operations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

Deposit insurance schemes of selected jurisdictions

Japan United States Canada KoreaThe common standard

within the EU (the deposit insurance directive)

United Kingdom France Germany

Deposit insurance institution

Deposit Insurance Corporation of Japan (DICJ)Federal Deposit Insurance Corporation (FDIC)

Canada Deposit Insurance Corporation (CDIC)

Korea Deposit Insurance Corporation (KDIC) — Financial Services Compensation Scheme (FSCS) Fonds de Garantie des Depôts (FGD)

[Compulsory membership]Entschadigungseinrichtung deutscherBanken GmbH (EdB)(Compensation Scheme of German Banks)

[Voluntary membership]Bundesverband deutscher Banken(Association of German Banks)

Year of foundation

1971 1934 1967 1996(Standards established in 1994; draft revision announced in July 2010 is currently under consideration by European Parliament)

2001(Deposit insurance system started in 1982)


1966

Character Public institution Public institution Public institution Public institution — Public institution Private institution Private institution

Number of staff

366 (FY2012 authorized staff) 7,973 (end of 2011) 96 (March 2011) 561 (end of 2010) — 182 (March 2012) Several peopleSeveral people (full-time staff) (supported by the Association of German Banks)

Insured financial institutions

[Compulsory membership]The following financial institutions, where their head office is in Japan:1) Banks stipulated in the Banking Act2) Long-term credit banks stipulated in the Long-Term

Credit Bank Act3) Shinkin banks4) Credit cooperatives5) Labor banks6) The Shinkin Central Bank7) The Shinkumi Federation Bank8) The Rokinren Bank9) The Shoko Chukin Bank

[Compulsory membership]1) Banks2) Commercial banks3) Savings and loan associa-

tions4) Thrift institutions5) Savings banks

[Compulsory membership]1) Banks2) Trust companies3) Loan companies

[Compulsory membership]1) Banks2) Mutual savings banks (deposit and saving

installment deposits, loan association bonds)3) Korean Federation of Savings Banks (KFSB)

(funds acquired by bank cheques)4) Branches of foreign banks

Eligible financial institutions are planned to be standardized within the EU by the end of 2012.

[Compulsory membership]1) Banks2) Branches of foreign banks chartered outside of the

European Economic Area (EEA)3) Building societies4) Credit unions

[Compulsory membership]1) Banks2) Branches of foreign banks chartered

outside of the EEA

[Compulsory membership]1) Banks2) Building and Loan Associations3) Branches of foreign banks chartered

outside of the EEA

* Branches of foreign banks can be members of the voluntary scheme

[Voluntary membership]1) Banks2) Branches of foreign banks

Eligible deposits

[Eligible deposits]1) Deposits2) Installment savings3) Installment deposits4) Money trusts under the guarantee of principal5) Bank debentures (limited to custody products)

[Non-eligible deposits]1) Foreign-currency deposits2) Negotiable certificates of deposits3) Subscribed bank debentures and bank debentures

whose custody agreement has expired4) Loan trusts whose rights of beneficiary are recorded in

the transfer of corporate bonds, shares and others, or trusts issuing beneficiary certificates, subject to the Act on Book-Entry Transfer of Company Bond, Shares, etc.

5) Deposits and others in special international financial transaction accounts (Japan offshore market accounts)

6) Deposits and others from the Bank of Japan (excluding treasury funds)

7) Deposits and others from insured financial institutions (excluding those related to the investment of defined contribution pension reserves)

8) Deposits and others from the DICJ9) Anonymous bank accounts

[Deposits excluded from protection]1) Deposits and others under another party’s name

(Including those under fictitious/false name)2) Deposits and others to be re-lent to a third party

[Eligible deposits] 1) Current accounts2) Ordinary accounts3) Time deposits4) Negotiable certificates of

deposits5) Foreign-currency deposits6) Checks, money orders,

traveler’s cheques

[Non-eligible deposits]1) Bonds2) Trust vehicles

[Eligible deposits]1) Current accounts2) Ordinary accounts3) Time deposits with

maturity date of less than 5 years

4) Negotiable certificates of deposits

5) Debentures issued by loan companies

6) Certified draft, traveler’s cheques, money order of credit

[Non-eligible deposits]1) Foreign currency

deposits2) Time deposits with

maturity date of more than 5 years

3) Debentures and bonds issued by other than loan companies

[Eligible deposits]1) Current accounts2) Ordinary accounts3) Time deposits4) Secondary Bills5) Trust vehicle under the guarantee of principal6) Foreign-currency deposits

[Non-eligible deposits]1) Negotiable certificates of deposits2) Bonds excluding Secondary Bills3) Trust vehicle without the guarantee of principal4) Deposits from the government5) Deposits from the central bank6) Deposits from KDIC7) Deposits from financial institution

Eligible deposits are planned to be standardized within the EU by the end of 2012.

[Eligible deposits]1) Current accounts2) Ordinary accounts3) Time deposits4) Foreign currency deposits5) Deposits of branches of foreign banks in the EEA

[Non-eligible deposits]1) Deposits of financial institutions2) Individual deposits concerned with failed financial

institutions3) Anonymous bank accounts4) Deposits under an alias or fictitious name5) Deposits concerned with money laundering

activities

[Eligible deposits]1) Current accounts2) Ordinary accounts3) Time deposits4) Foreign currency-denominated deposits

in the EEA5) Deposits of branches of foreign banks

in the EEA6) Unsettled bonds

[Non-eligible deposits]1) Negotiable certificates of deposit2) Bonds3) Trust vehicles4) Deposits from the central government5) Deposits from financial institutions6) Deposits concerned with failed financial

institutions7) Anonymous bank accounts8) Deposits concerned with money

laundering activities

[Eligible deposits]1) Current accounts2) Ordinary accounts3) Time deposits4) Foreign currency deposits (Deposits

denominated in currencies outside of the EEA are not insured by the compulsory system but insured by the voluntary system)

5) Deposits of branches of foreign banks

[Non-eligible deposits]1) Deposits from financial institutions2) Deposits from individuals concerned with

failed financial institutions3) Anonymous bank accounts

Scope of deposit protection

Principal of up to ¥10 million plus interest thereon payable until the day of failure. Deposits for payment and settlement purposes are fully covered (permanent measures).

US$250,000 (approx. ¥21 million including interest) Unlimited protection is applied to deposits used for settlement purposes on a temporary basis by the end of 2012.

C$100,000 (approx. ¥8.3 million, including interest)

W50 million (approx. ¥3.7 million, interest included) €100,000 (approx. ¥11 million) including interest — revised at the end of 2010.

£85,000 (approx. €100,000, interest included) (Note 1) € 100,000 (interest included) (Note 1) [Compulsory membership]€ 100,000 (interest included) (Note 1)

[Voluntary membership]An amount of deposits which is equal to 30% of capital is insured per person per institutionPremium rate

Premium rate

Fixed premium rate:Effective premium rate: 0.084%Deposits for payment and settlement purposes: 0.107%General deposits, etc.: 0.082%(FY2012) (Note 2)

Variable premium rate:0.025 – 0.45%

Variable premium rate: 0.028–0.222%

Fixed premium rateBanks: 0.08%,Mutual savings banks: 0.40%Special premium rate (by 2027)All sectors of financial institutions across-the board: 0.1%

A variable premium rate scheme is planned to be standardized within the EU by the end of 2012.

Fixed premium rate• Cap on the total premiums collected by all divisions

of an insurance-covered financial institution: £1.84 billion on an annual basis.

• Insurance premiums equivalent to the amount of insurance payments made in the past plus the amount of insurance payments expected in the next 12 months are levied within the above upper limit.

• The total amounts of insurance premiums are to be paid by individual deposit-taking institutions in proportion to the balance of their respective insured deposits.

Variable premium rate [Compulsory membership]Fixed premium rate

[Voluntary membership]Variable premium rate

Other

• Agricultural cooperatives, fisheries cooperatives, marine product processing cooperatives and the Norinchukin Bank are protected by Agricultural and Fishery Coopera-tive Savings Insurance Corporation.

• Security companies are protected by Investor-Protection Fund.

• Life/Non-life insurance companies are protected by Policyholders’ Protection Corporation.

• Deposits at credit unions are protected by National Credit Union Administration (NCUA).

• Deposits at credit unions and Co-Ops are insured by provincial deposits insurance corporations.

• Diversified financial companies (promissory notes, Secondary Bills, and CMAs), securities firms (customer deposits and saving through securities), and insurance firms (individual insurance policies and unemployment insurance policies) are also protected.

• Deposits at credit unions are protected by National Credit Union Federation of Korea.

• The Financial Services Compensation Scheme provides protection to securities companies, insurance companies (life and casualty insurance), investment advisory companies, insurance brokers and mortgage brokers (compensation is provided in the case of inappropriate advice or sales).

• Deposits at cooperative association banks and savings banks are protected by different deposit insurance schemes.

Notes: 1. The EU Deposit Insurance Directives sets the limit at €100,000 across the board. 2. See P78: II. 7. (3) (i) regarding Japan’s insurance premium rates in FY2012. 3. Exchange rates are based on the monthly average of March 2012.Sources: Materials provided by related authorities of various countries

III. Annex


90

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

I. DIC

J’sO

perations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

Deposit insurance schemes of selected jurisdictions

Japan United States Canada KoreaThe common standard

within the EU (the deposit insurance directive)

United Kingdom France Germany

Deposit insurance institution

Deposit Insurance Corporation of Japan (DICJ)Federal Deposit Insurance Corporation (FDIC)

Canada Deposit Insurance Corporation (CDIC)

Korea Deposit Insurance Corporation (KDIC) — Financial Services Compensation Scheme (FSCS) Fonds de Garantie des Depôts (FGD)

[Compulsory membership]Entschadigungseinrichtung deutscherBanken GmbH (EdB)(Compensation Scheme of German Banks)

[Voluntary membership]Bundesverband deutscher Banken(Association of German Banks)

Year of foundation

1971 1934 1967 1996(Standards established in 1994; draft revision announced in July 2010 is currently under consideration by European Parliament)



1966

Character Public institution Public institution Public institution Public institution — Public institution Private institution Private institution

Number of staff

366 (FY2012 authorized staff) 7,973 (end of 2011) 96 (March 2011) 561 (end of 2010) — 182 (March 2012) Several peopleSeveral people (full-time staff) (supported by the Association of German Banks)

Insured financial institutions

[Compulsory membership]The following financial institutions, where their head office is in Japan:1) Banks stipulated in the Banking Act2) Long-term credit banks stipulated in the Long-Term

Credit Bank Act3) Shinkin banks4) Credit cooperatives5) Labor banks6) The Shinkin Central Bank7) The Shinkumi Federation Bank8) The Rokinren Bank9) The Shoko Chukin Bank

[Compulsory membership]1) Banks2) Commercial banks3) Savings and loan associa-

tions4) Thrift institutions5) Savings banks

[Compulsory membership]1) Banks2) Trust companies3) Loan companies

[Compulsory membership]1) Banks2) Mutual savings banks (deposit and saving

installment deposits, loan association bonds)3) Korean Federation of Savings Banks (KFSB)

(funds acquired by bank cheques)4) Branches of foreign banks

Eligible financial institutions are planned to be standardized within the EU by the end of 2012.

[Compulsory membership]1) Banks2) Branches of foreign banks chartered outside of the

European Economic Area (EEA)3) Building societies4) Credit unions

[Compulsory membership]1) Banks2) Branches of foreign banks chartered

outside of the EEA

[Compulsory membership]1) Banks2) Building and Loan Associations3) Branches of foreign banks chartered

outside of the EEA

* Branches of foreign banks can be members of the voluntary scheme

[Voluntary membership]1) Banks2) Branches of foreign banks

Eligible deposits

[Eligible deposits]1) Deposits2) Installment savings3) Installment deposits4) Money trusts under the guarantee of principal5) Bank debentures (limited to custody products)

[Non-eligible deposits]1) Foreign-currency deposits2) Negotiable certificates of deposits3) Subscribed bank debentures and bank debentures

whose custody agreement has expired4) Loan trusts whose rights of beneficiary are recorded in

the transfer of corporate bonds, shares and others, or trusts issuing beneficiary certificates, subject to the Act on Book-Entry Transfer of Company Bond, Shares, etc.

5) Deposits and others in special international financial transaction accounts (Japan offshore market accounts)

6) Deposits and others from the Bank of Japan (excluding treasury funds)

7) Deposits and others from insured financial institutions (excluding those related to the investment of defined contribution pension reserves)

8) Deposits and others from the DICJ9) Anonymous bank accounts

[Deposits excluded from protection]1) Deposits and others under another party’s name

(Including those under fictitious/false name)2) Deposits and others to be re-lent to a third party

[Eligible deposits] 1) Current accounts2) Ordinary accounts3) Time deposits4) Negotiable certificates of

deposits5) Foreign-currency deposits6) Checks, money orders,

traveler’s cheques

[Non-eligible deposits]1) Bonds2) Trust vehicles

[Eligible deposits]1) Current accounts2) Ordinary accounts3) Time deposits with

maturity date of less than 5 years

4) Negotiable certificates of deposits

5) Debentures issued by loan companies

6) Certified draft, traveler’s cheques, money order of credit

[Non-eligible deposits]1) Foreign currency

deposits2) Time deposits with

maturity date of more than 5 years

3) Debentures and bonds issued by other than loan companies

[Eligible deposits]1) Current accounts2) Ordinary accounts3) Time deposits4) Secondary Bills5) Trust vehicle under the guarantee of principal6) Foreign-currency deposits

[Non-eligible deposits]1) Negotiable certificates of deposits2) Bonds excluding Secondary Bills3) Trust vehicle without the guarantee of principal4) Deposits from the government5) Deposits from the central bank6) Deposits from KDIC7) Deposits from financial institution

Eligible deposits are planned to be standardized within the EU by the end of 2012.

[Eligible deposits]1) Current accounts2) Ordinary accounts3) Time deposits4) Foreign currency deposits5) Deposits of branches of foreign banks in the EEA

[Non-eligible deposits]1) Deposits of financial institutions2) Individual deposits concerned with failed financial

institutions3) Anonymous bank accounts4) Deposits under an alias or fictitious name5) Deposits concerned with money laundering

activities

[Eligible deposits]1) Current accounts2) Ordinary accounts3) Time deposits4) Foreign currency-denominated deposits

in the EEA5) Deposits of branches of foreign banks

in the EEA6) Unsettled bonds

[Non-eligible deposits]1) Negotiable certificates of deposit2) Bonds3) Trust vehicles4) Deposits from the central government5) Deposits from financial institutions6) Deposits concerned with failed financial

institutions7) Anonymous bank accounts8) Deposits concerned with money

laundering activities

[Eligible deposits]1) Current accounts2) Ordinary accounts3) Time deposits4) Foreign currency deposits (Deposits

denominated in currencies outside of the EEA are not insured by the compulsory system but insured by the voluntary system)

5) Deposits of branches of foreign banks

[Non-eligible deposits]1) Deposits from financial institutions2) Deposits from individuals concerned with

failed financial institutions3) Anonymous bank accounts

Scope of deposit protection

Principal of up to ¥10 million plus interest thereon payable until the day of failure. Deposits for payment and settlement purposes are fully covered (permanent measures).

US$250,000 (approx. ¥21 million including interest) Unlimited protection is applied to deposits used for settlement purposes on a temporary basis by the end of 2012.

C$100,000 (approx. ¥8.3 million, including interest)

W50 million (approx. ¥3.7 million, interest included) €100,000 (approx. ¥11 million) including interest — revised at the end of 2010.

£85,000 (approx. €100,000, interest included) (Note 1) € 100,000 (interest included) (Note 1) [Compulsory membership]€ 100,000 (interest included) (Note 1)

[Voluntary membership]An amount of deposits which is equal to 30% of capital is insured per person per institutionPremium rate

Premium rate

Fixed premium rate:Effective premium rate: 0.084%Deposits for payment and settlement purposes: 0.107%General deposits, etc.: 0.082%(FY2012) (Note 2)

Variable premium rate:0.025 – 0.45%

Variable premium rate: 0.028–0.222%

Fixed premium rateBanks: 0.08%,Mutual savings banks: 0.40%Special premium rate (by 2027)All sectors of financial institutions across-the board: 0.1%

A variable premium rate scheme is planned to be standardized within the EU by the end of 2012.

Fixed premium rate• Cap on the total premiums collected by all divisions

of an insurance-covered financial institution: £1.84 billion on an annual basis.

• Insurance premiums equivalent to the amount of insurance payments made in the past plus the amount of insurance payments expected in the next 12 months are levied within the above upper limit.

• The total amounts of insurance premiums are to be paid by individual deposit-taking institutions in proportion to the balance of their respective insured deposits.

Variable premium rate [Compulsory membership]Fixed premium rate

[Voluntary membership]Variable premium rate

Other

• Agricultural cooperatives, fisheries cooperatives, marine product processing cooperatives and the Norinchukin Bank are protected by Agricultural and Fishery Coopera-tive Savings Insurance Corporation.

• Security companies are protected by Investor-Protection Fund.

• Life/Non-life insurance companies are protected by Policyholders’ Protection Corporation.

• Deposits at credit unions are protected by National Credit Union Administration (NCUA).

• Deposits at credit unions and Co-Ops are insured by provincial deposits insurance corporations.

• Diversified financial companies (promissory notes, Secondary Bills, and CMAs), securities firms (customer deposits and saving through securities), and insurance firms (individual insurance policies and unemployment insurance policies) are also protected.

• Deposits at credit unions are protected by National Credit Union Federation of Korea.

• The Financial Services Compensation Scheme provides protection to securities companies, insurance companies (life and casualty insurance), investment advisory companies, insurance brokers and mortgage brokers (compensation is provided in the case of inappropriate advice or sales).

• Deposits at cooperative association banks and savings banks are protected by different deposit insurance schemes.

Notes: 1. The EU Deposit Insurance Directives sets the limit at €100,000 across the board. 2. See P78: II. 7. (3) (i) regarding Japan’s insurance premium rates in FY2012. 3. Exchange rates are based on the monthly average of March 2012.Sources: Materials provided by related authorities of various countries

III. Annex

91


ICJ’s

Operations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

Recognizing that it is important to unerringly accomplish its mission based on the changes in the environment surrounding the deposit insurance system, the DICJ strives to ensure enhanced governance and the appropri-ateness and efficiency of its operations through the operation management process of setting medium-term operational goals, conducting operations according to policies drawn up each year based on these goals, evalu-ating performance of the conducting operations for the ended fiscal year and utilizing the evaluation results in

future operations.In FY2011, the DICJ formulated and announced the Medium-Term Goals for FY2011-2013 and the Opera-tional Policy for FY2011 on Apri1, 2011. Due to the revision of the Deposit Insurance Act, etc., we revised part of their content during the year.The DICJ evaluated the FY2011 performance of opera-tions executed under the operational policy for the year and announced the Performance Evaluation Report on June 29, 2012.

9. Preparation and Announcement of the Medium-Term Goals, Operational Policy and Performance Evaluation

April 1, 2011

Revised on June 30, 2011

Revised on March 30, 2012

Deposit Insurance Corporation of Japan Medium-Term Goals (FY2011– FY2013)

I. The DICJ’s MissionThe mission of the DICJ is to appropriately manage the deposit insurance system (Note 1) in order to achieve the objective of the Deposit Insurance Act, which is to establish a deposit insurance system in order to provide the protection of depositors, etc., and to ensure the settlement of funds related to failed financial institutions, thereby contributing to the maintenance of the stability of the financial system. (Note 2) Notes:1. �The deposit insurance system consists of the following operations: payout of deposit insurance and the purchase of deposits and

other claims necessary in the event that repayment of said deposits, etc., is suspended by a financial institution; financial assis-tance in mergers and other situations in the resolution of failed financial institutions, the management and transfer of business, etc., by a financial administrator; purchase of specified difficult recovery claims and measures to deal with financial crises, etc.

2. �The DICJ also undertakes operations related to capital injection with public funds based on the Financial Functions Strengthening Act, operations related to the posting of public notices based on the Criminal Accounts Damage Recovery Act, etc.

II. Circumstances Surrounding the Deposit Insurance System and Organizational Operations of the DICJ(Domestic and foreign financial conditions)Many countries, including European countries and the United States, have taken various measures to deal with the recent global financial crisis. As the financial environment has subsequently restored some calm, the shift from crisis responses to responses in normal times is gradually taking place. International discussions now also make progress about the reform of financial regulations and supervision in order to prevent a similar crisis from ever recurring.With the impact of the recent financial crisis on the Japanese financial system rather limited and no significant impact of the first failure resolution under the limited coverage observed, Japan’s financial conditions have remained stable as a whole.Under these circumstances, Japan is responding with the resumption of capital injection with public funds and other measures, albeit on a temporary basis, given progress observed in the resolution of problems traced to the financial crises of the past (the “Heisei Financial Crisis”). Financial institutions, meanwhile, are taking steps toward the integration of management, such as mergers, and the enhancement of their financial bases.In addition, responses to financial crimes becoming more sophisticated and malicious in recent years, and facilitating the resolution of failures and striving to efforts to cut off relationships between financial institutions and antisocial forces for the prevention of damage caused by antisocial forces are increasingly gaining in importance.Furthermore, responses to the aftereffects of the Great East Japan Earthquake have become significant challenges.(The situation surrounding the DICJ)Regarding the DICJ’s operations, while the ex-post facto resolution of problems traced to the “Heisei Financial Crisis” has made smooth progress, the first case of failure resolution under the limited coverage has occurred.


92

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

I. DIC

J’sO

perationsIII. A

nnexII. O

verview

of the DIC

J’s A

ctivities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

The DICJ is faced with the challenge of facilitating the resolution of failures and striving to appropriately proceed going forward more smoothly by reviewing the case of this failure resolution, finding out areas for improvement and considering and working out adequate responses as necessary.In addition, in order to further facilitate the financial administrator operations in the event of failure of a finan-cial institution, the DICJ needs to continue to efficiently build up the failure resolution system and also appro-priately respond to the impact of the Great East Japan Earthquake.(Responses to the changing environment surrounding the DICJ)In order to unerringly accomplish its mission amid the changing environment, the DICJ finds it necessary to continue to promote the resolution of problems traced to the “Heisei Financial Crisis” and enhance its prepared-ness for failure resolution under the limited coverage of deposit insurance, and also to constantly examine and sort out functions and its own organizational management in light of the DICJ’s principles as an operator of a financial safety net. Therefore, the DICJ will strive to improve its operational preparedness as follows:(i) As the entity responsible for the protection of depositors through the deposit insurance system, the DICJ

will strive to make complete preparedness for the resolution of the failure of a financial institution, in light of the lessons learned from the failure resolution currently being carried out, to secure the understanding and security of depositors while enhancing close cooperation with the regulatory and supervisory authori-ties as well as the central bank.

(ii) The DICJ will appropriately exert with serving as the operator of financial safety net, including capital injection with public funds.

(iii) In order to mitigate moral hazards related to financial institution managers, etc., which are associated with insurance, and in order to cope with increasingly malicious financial crimes, the DICJ will bolster its countervailing power against antisocial forces, etc., and appropriately exert the function of pursuit of liability and the collection of assets. In addition, the DICJ will appropriately execute the operations of the purchase and collection of “specified difficult recovery claims.”

(iv) The DICJ will appropriately execute the purchase, etc., of assets from failed financial institutions.(v) The DICJ will appropriately execute the operations newly assigned to it, including procedures for crimi-

nal accounts damages recovery for the relief of victims.(vi) The DICJ will appropriately manage its operations with cooperating and collaborating with affiliated

companies.(vii) The DICJ will seek to improve its research and study activities, etc. as well as international cooperation

based on an understanding of the needs of the times.(viii) The DICJ will strive for the self-governing management of its operations and pay due heed to ensuring

efficiency and compliance, etc.

III. Medium-Term Goals for FY2011– 2013The DICJ has set the following medium-term goals for FY2011– FY2013 as a roadmap for advancing the opera-tions described above, also set out the basic directions for the execution and improvement of its operations.

(Initiatives for depositor protection from the viewpoint of depositors)1. With consideration for the failure resolution of financial institution that the DICJ is currently conducting,

the DICJ will improve and enhance its preparedness for the failure resolution framework of financial insti-tutions in response to every situation while enhancing close cooperation with the relevant authorities. In particular, regarding the DICJ’s system for use in the depositor’s name-based aggregation of deposits and the operations of financial administrators, etc., the DICJ will proceed with improvement of system opera-tions across the DICJ towards the realization of secure and smooth business execution, and aim at smooth operation of the system in the event of financial institution failure.

As a bill to revise the Deposit Insurance Act was enacted that requires financial institutions to redouble their efforts to enhance their preparedness in normal times, etc.,(Note) the DICJ will strive to make this widely known (through the provision of information on failure resolution scheme, etc.) in preparation for the enforcement of the revised act, and upon such enforcement, will provide financial institutions with necessary advice and follow up on the status of their responses, with the cooperation and coordination of relevant departments within the DICJ.Note: When system responses are needed, financial institutions must develop a system within a reasonable period of time. However,

as of the day of enforcement, they only have to formulate a system development plan.

III. Annex

93


ICJ’s

Operations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

2. The DICJ will strive for easy-to-understand public relations activities related to the deposit insurance system and the DICJ’s operations with the viewpoint of depositors in mind.

(Operations related to capital injection)3. The DICJ will work closely with applicant financial institutions and the relevant authorities in its opera-

tions related to capital injection with public funds, including special measures concerning to the Great East Japan Earthquake under the revised Financial Functions Strengthening Act. The DICJ will also strive for the appropriate management and smooth disposal of preferred shares and other capital-raising instruments subscribed for capital injection.

(Appropriate exertion of the function of pursuit liability and the appropriate implementation of the purchase and collection of specified difficult recovery claims)4. The DICJ will support the resolution and collection operations undertaken by contracted bank, including

strict responses to obstructed recovery cases, and appropriately execute its operations to pursue the liability of former managers of failed financial institutions, etc. In addition, following the enactment of a bill to revise the Deposit Insurance Act to include the operations of the purchase and collection of specified diffi-cult recovery claims held by financial institutions in the DICJ’s operations, the DICJ will appropriately carry out the operations concerned pursuant to the revised Deposit Insurance Act.

(Purchase of assets, etc. from failed financial institutions, etc.)5. The DICJ will appropriately implement the purchase of assets from failed financial institutions, etc., and

the disposal of purchased assets, etc.6. The DICJ will appropriately carry out operations related to the Incubator Bank and strive to find a final

assuming financial institution at an early date.(Procedures for criminal accounts damages recovery)7. The DICJ will appropriately implement public notice operations related to procedures for criminal accounts

damages recovery from the perspective of contributing to the relief of victims.(Cooperation and collaboration with affiliated companies)8. The DICJ will cooperate and collaborate with affiliated companies and provide necessary guidance and

advice, etc., to them. In addition, following the enactment of a bill to revise the Deposit Insurance Act, the DICJ will review the role of the RCC in accordance with the revised Act so that the RCC can appropriately execute its operations.

(Research and study, international cooperation)9. The DICJ will conduct research and study activities as well as international cooperation by comprehen-

sively taking account of the financial and economic situations, etc.(Self-governing management of operations, etc.)10. The DICJ will steadily promote the strengthening of its financial management as well as the rationalization

of operations related to its finances, and will also strive for easy-to-understand disclosure of information on its financial conditions.

11. The DICJ will establish its preparedness necessary for compliance and management of operational risk, etc.12. The DICJ will appropriately and efficiently respond to the changing environment in its organizational

system, etc.

IV. The Relation between the Medium-Term Goals and the Operational Policy of Each Fiscal YearThe operational policy for each fiscal year is formulated based on the medium-term goals and the situation at that point in time as well as the implementation status and evaluation of the operational policy of the preceding fiscal years.


94

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

I. DIC

J’sO

perationsIII. A

nnexII. O

verview

of the DIC

J’s A

ctivities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

April 1, 2011

Revised on June 30, 2011

Deposit Insurance Corporation of Japan Operational Policy for FY2011 (April 2011– March 2012)

1. Improvement and Enhancement of the Failure Resolution Framework of Financial Institutions Corresponding to Every Situation from the Perspective of the Protection of Depositors.(i) The DICJ will strive to strengthen its systems in order to further enhance the failure resolution scheme

and the financial administrator operations. Furthermore, the DICJ will enhance cooperation with related parties, both within and outside the DICJ, provide periodic practical training, workshops and seminars, secure the personnel of the financial administrator team and improve their know-how and skills, while striving for the management and analysis of necessary information.

In addition, if a financial institution fails on Friday and the DICJ is appointed as a financial administrator, the DICJ will strive to let the failed financial institution resume its business more smoothly and steadily on the following Monday.

Furthermore, as the Deposit Insurance Act was revised and enacted to require financial institutions to redouble the efforts to enhance the preparedness in normal times, etc., the DICJ will strive to make this widely known (through the provision of information on the failure resolution scheme, etc.) in preparation for the enforcement of the revised act.

(ii) In order to maintain and improve the accuracy of the depositor’s name-based aggregation database, the DICJ will conduct a range of initiatives, consisting of comprehensive management and analysis as to how financial institutions maintain depositors’ data, and selective, efficient and effective implementation of measures, including inspections for financial institutions in accordance with the situation, hearings on improvements related to inspection results (hereinafter referred to as “improvement hearings”), system verification (Note) and training and advice. In doing so, the DICJ will engage in a thorough interactive exchange of opinions with financial institutions regarding inspections and improvement hearings, and through such interactions, will encourage financial institutions to appropriately maintain and manage depositor’s name-based aggregation databases and related systems.

The DICJ will also take every possible measure for information security.Note: System verification refers to the verification by the DICJ’s system of appropriate development of the depositor’s name-based

aggregation database at each financial institution by requesting the submission of depositor data from financial institutions.

(iii) In order to further accelerate the processing of the depositor’s name-based aggregation database and smoothly facilitate financial administrator operations, the DICJ, in accordance with the experience of failure resolution in the previous fiscal year, will continue to improve and expand its business execution systems and strive to further enhance its actual operational capabilities. The DICJ will also continue to efficiently proceed with the establishment of a failure resolution system for use in name-based aggrega-tion of deposits and financial administration operations, etc., and aim for its trouble-free operation.

(iv) The DICJ will consider necessary matters concerning the failure resolution scheme and related practices from the perspective of ensuring the smooth management of the deposit insurance system. The DICJ will also enhance close cooperation with the relevant authorities and seek to cooperate with other safety net players.

2. Public Relations Activities Related to the Deposit Insurance System and the DICJ’s OperationsThe DICJ will strive to undertake public relations activities utilizing various media in cooperation with relevant organizations in order to ensure the awareness among depositors, etc., of the deposit insurance system and the DICJ’s operations.

3. Operations Related to Capital Injection(i) The DICJ will work closely with applicant financial institutions and the relevant authorities in its opera-

tions related to capital injection under the Financial Functions Strengthening Act (the application deadline: March 31, 2017), including special measures concerning the Great East Japan Earthquake under the revised Financial Functions Strengthening Act.

(ii) Regarding preferred shares and other capital-raising instruments subscribed under the Early Strengthening Act and the Financial Functions Strengthening Act and other Acts, the DICJ will continue to work toward their appropriate management and strive for their smooth disposal based on “Temporary Guideline for Disposal of Preferred Shares and other Capital-Raising Instruments Acquired through Capital Injection”

III. Annex

95


ICJ’s

Operations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

(published in October 2005).4. Support for Resolution and Collection Operations of the Contracted Bank, including Strict Responses to

Malicious Obstructed Recovery Cases, and the Proper Implementation of Pursuit of Liability as well as Proper Implementation of Purchase and Collection of Specified Difficult Recovery Claims Held by Financial Institutions under the Revised Deposit Insurance Act(i) The DICJ will enhance cooperation with the RCC, a contracted bank, and provide proactive guidance and

advice in order to support the RCC’s appropriate collection of assets from malicious debtors, etc., in particular in support of the RCC’s strict responses to obstructed recovery cases involving antisocial forces.

(ii) In order to support the resolution and collection operations undertaken by the RCC, a contracted bank, the DICJ will appropriately and accurately select cases to be investigated and pursue in-depth asset investiga-tions focusing on malicious debtors, including antisocial forces.

(iii) The DICJ will strive to conduct thorough investigations into failed financial institutions to clarify developments, etc., that led to failures and appropriately execute operations to pursue criminal and civil liabilities.

(iv) Following the enactment of a bill to revise the Deposit Insurance Act to include the operations of the purchase and collection of specified difficult recovery claims held by financial institutions in the DICJ’s operations, the DICJ will strive to improve its preparedness and appropriately carry out the operations concerned pursuant to the revised Deposit Insurance Act.

5. Appropriate Management and Disposal, etc., of Retained Asset The DICJ will appropriately and effectively implement the management and disposal of claims and shares, etc., acquired from failed financial institutions, etc., from the perspective of customer protection and minimization of an impact on the markets, etc. The DICJ, considering the length of processing period, also appropriately provide financial assistance to bridge banks, etc.

6. Appropriate Execution of Operations Related to the Incubator BankThe DICJ will appropriately execute the business operations of the Incubator Bank, including the succession of depositors and the continuance of loans to sound debtors in good faith. In addition, the DICJ will strive to find a final assuming financial institution with the cooperation of relevant organizations at an early date.

7. Appropriate Implementation of Public Notice Operations, etc., Related to Procedures for Criminal Accounts Damages RecoveryThe DICJ will continue to smoothly implement public notice operations related to procedures for criminal accounts damages recovery from the perspective of contributing to the relief of victims, and continue to make preparations for a system update, including public notices, scheduled for April 2012.The DICJ will continue to appropriately deal with “The Project Team on Issues Surrounding Payments to Deposit Insurance Corporation Stipulated in the Criminal Accounts Damage Recovery Act” of the Financial Services Agency.

8. Cooperation and Collaboration with Affiliated Companies(i) Resolution and Collection Corporation (RCC) The DICJ will cooperate and collaborate with the RCC and appropriately execute the operations of the

disposal of “Jusen claims,” etc. In addition, following the enactment of a bill to revise the Deposit Insur-ance Act, the DICJ will review the role of the RCC in accordance with the revised Act so that the RCC can appropriately execute its operations. Furthermore, the DICJ will provide guidance and advice neces-sary for the RCC to appropriately deal with the collection of the claims it holds accurately grasping the conditions of its debtors in areas damaged by the Great East Japan Earthquake.

(ii) Enterprise Turnaround Initiative Corporation of Japan (ETIC) The DICJ will cooperate in the appropriate and efficient implementation of operations of the ETIC.

9. Research and Study/International Cooperation Comprehensively Taking Account of the Financial and Economic Situations, etc.Given the status of crisis management, etc., in response to the latest global financial crisis in various countries and areas in the world, the DICJ will take the following steps:(i) Regarding matters related to the DICJ’s operations such as the deposit insurance system, etc., the DICJ

will conduct research and study activities both at home and abroad and provide the information to parties


96

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

I. DIC

J’sO

perationsIII. A

nnexII. O

verview

of the DIC

J’s A

ctivities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

concerned in various quarters.(ii) The DICJ will take the initiative to enhance cooperation and collaboration with overseas deposit insur-

ance authorities. The DICJ will also strive to improve Japan’s deposit insurance system by grasping inter-national trends through the hosting of international conferences and proactive participation in the International Association of Deposit Insurers (IADI). Furthermore, the DICJ will continue to contribute to the establishment of an international cooperation system concerning the deposit insurance system and provide technical assistance to other countries, and in particular seek to establish a cooperative framework in Asia. In order to further enhance the relationships with deposit insurance organizations of other countries, the DICJ will carry out personnel exchanges with these organizations.

10. Steady Promotion of the Strengthening and Efficiency of Finances and Disclosure of Information on Financial Conditions(i) The DICJ will grapple with the strengthening of its financial management as well as rationalization of

operations related to its finances and strive to draw up, execute and manage budget plans that are capable of responding to the resolution of financial institution failures, etc. The DICJ will also strive for easy-to-understand disclosure of information on its financial conditions.

(ii) Taking its financial conditions into account, the DICJ will set appropriate deposit insurance premium rates to ensure an equilibrium in the DICJ’s finances (the General Account) in the long term.

(iii) In view of prevailing financial market conditions, the DICJ will continue to strive for efficient fund management by focusing on safety and certainty, and seek to raise funds in a stable manner conducive to the soundness and efficiency of its finances after accurately elucidating funding needs. The DICJ will also strive to provide information on its fund management and fund-raising activities in an easy-to-under-stand manner.

11. Enhancement of Readiness for Compliance, etc.The DICJ will further enhance its readiness for the compliance and management of operational risk, etc. In particular, the DICJ will take every possible measure for information security, including the protection of personal information. In order to make its executives and employees thoroughly aware of these matters, the DICJ will hold relevant training sessions in various forms at least twice a year.

12. Appropriate and Efficient Management of Organizational Systems, etc.Corresponding to the operational policy described above, the DICJ will continue to strive to appropriately and efficiently manage its organization, personnel and systems. The DICJ will strive to utilize and reallocate exist-ing resources in its organization and personnel and will pay full heed to cost performance in managing its systems.

III. Annex

97


ICJ’s

Operations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

The Performance Evaluation Report for FY2011

Task Main business performance Evaluation Future policy Responsible unit

1. Improvement and Enhancement of the Failure Resolution Framework of Financial Institutions Corresponding to Every Situa-tion from the Perspective of the Protection of Depositors

(i) Strengthening of systems to further enhance the failure resolution schemes and the financial administrator operations, etc.

❍ We strove to maintain and strengthen our readiness to respond to the failure of financial institutions by accumulating skills and know-how obtained through failure resolution practices as well as improving the plan of our future workshops and practical training system while further promoting our preparedness of financial administrator operations for contingencies.

January 2012 Basic training on failure resolution was conducted for all DICJ staff

March 2012 Training for operational staff of the DICJ was conducted

❍ Following the revision of the Deposit Insurance Act that requires financial institutions to redouble their efforts to enhance their preparedness for the repayment of insured deposits, etc., the DICJ disclosed neces-sary information, including checkpoints for procedures and manuals, etc. In addition, in order to proactively support financial institutions, etc., we conducted seminars targeting all sectors of financial institutions across-the-board and responded to inquiries from financial institutions, etc.

❍ We expeditiously and appropriately executed the financial administrator operations for the failure resolution of the Incubator Bank, as the DICJ, as an organization as a whole, grappled with various tasks on a routine basis through workshops and practical training in the past.

❍ We recognize that we could further strengthen our failure resolution system based on our practical experiences related to failure resolu-tion of the Incubator Bank.

❍ We recognize that we could deepen the understanding by financial institutions with regard to the significance of the revision to the Deposit Insurance Act.

❍ We will strive to further enhance our readiness through workshops, etc. that reflect the skills and know-how we have gained through resolution of the failure of the Incubator Bank.

❍ We will continue to encourage financial institu-tions to redouble their efforts to enhance their preparedness for the repayment of insured deposits, etc. through the inspections of and workshops, etc. for financial institutions.

Financial ReconstructionDepartment:


Treasury Department: Financial Planning and Coordination Division Finance Division I Finance Division II

Deposit Insurance Department: Information System Division Planning Division

Special Investigation Department: Investigation and Recovery Division

Inspection Department: Monitoring & Analysis Division


(ii) Maintenance and improvement of the accuracy of the depositor’s name-based aggregation database at finan-cial institutions

❍ Regarding on-site inspections, we continued to deepen our efforts to seek mutual cooperation between inspections and system verification and conducted “inspections and system verification” at the same time with the aim of improving skills (interoperability) of our staff in the Inspection Department. In addition, with an organic combination of various measures including on-site inspections, improvement hearings, system verification, and training and advice, we strove to maintain and improve the accuracy of the deposi-tor’s name-based aggregation database.

❍ We had DICJ staff, etc., who actually conducted inspections and examinations, sit in and exchange opinions at improvement hearings held by the Financial Services Agency, etc., in an effort to enhance understanding on the part of financial institutions.

❍ As for system verification, we made a decision to notify financial institutions for which we conducted verification of important points toward the improvement of the depositor’s name-based aggregation database with more specific information.

Administrative Year (Note 1)

No. of on-site inspections conducted

FYNo. of system verification conducted

No. of training and advice given

Banks, etc.

Shinkin banks

Credit Cooperatives

2001-2009 830 164 403 263 2001-2009 1,703 689

2010 46 5 27 14 2010 56 27

2011 (Note 2) 57 8 44 5 2011 82 50

Total 933 177 474 282 Total 1,841 766

Notes: 1. An administrative year is a period from July through June of the following year.

2. The number of on-site inspections conducted for the 2011 administrative year is an estimate.

❍ Regarding on-site inspections, improvement hearings, system verification, training and advice, we noted favorable results for achiev-ing the task as financial institutions were encouraged to promote efforts for the effective improvement of the depositor’s name-based aggregation database, etc., through our wcontinued efforts to seek mutual cooperation.

❍ With direct involvement of our staff in the Inspection Department in system verification, we were able to enhance the skills of our staff in the Inspection Department who are in charge of data analysis and expand the scope of verification, etc.

❍ However, there are still differences among financial institutions in the accuracy of the depositor’s name-based aggregation database and we see room for improvement. In addition, financial institutions need to constantly maintain and improve the accuracy of the depositor’s name-based aggregation database based on actual conditions, as they have to respond to the opening of new accounts and changes in data on individual depositors as well as relevant systems.

❍ In order to maintain and improve the accuracy of the depositor’s name-based aggregation database, it is necessary for us to continue to efficiently and effectively implement various measures based on the results of cooperation thus far while enhancing the contents of these measures.

❍ As new inspections will be conducted starting from the next administrative year in order to respond to the revision to the Deposit Insur-ance Act, we are planning to consider inspec-tion policies and plans, implementation of inspection guidelines and provide sufficient training to our staff. In addition, before conducing inspections, we are planning to exchange opinions with financial institutions which will receive inspections sufficiently, as the revised Deposit Insurance Act has been enforced recently.

❍ We will strive to provide information to prevent errors in the development of the depositor’s name-based aggregation database.

Inspection Department: Inspection Planning Division Monitoring and Analysis Division

Deposit Insurance Department: Information System Division Advisory Service Division


98

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

I. DIC

J’sO

perationsIII. A

nnexII. O

verview

of the DIC

J’s A

ctivities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy



(i) Strengthening of systems to further enhance the failure resolution schemes and the financial administrator operations, etc.

❍ We strove to maintain and strengthen our readiness to respond to the failure of financial institutions by accumulating skills and know-how obtained through failure resolution practices as well as improving the plan of our future workshops and practical training system while further promoting our preparedness of financial administrator operations for contingencies.

January 2012 Basic training on failure resolution was conducted for all DICJ staff

March 2012 Training for operational staff of the DICJ was conducted

❍ Following the revision of the Deposit Insurance Act that requires financial institutions to redouble their efforts to enhance their preparedness for the repayment of insured deposits, etc., the DICJ disclosed neces-sary information, including checkpoints for procedures and manuals, etc. In addition, in order to proactively support financial institutions, etc., we conducted seminars targeting all sectors of financial institutions across-the-board and responded to inquiries from financial institutions, etc.

❍ We expeditiously and appropriately executed the financial administrator operations for the failure resolution of the Incubator Bank, as the DICJ, as an organization as a whole, grappled with various tasks on a routine basis through workshops and practical training in the past.

❍ We recognize that we could further strengthen our failure resolution system based on our practical experiences related to failure resolu-tion of the Incubator Bank.

❍ We recognize that we could deepen the understanding by financial institutions with regard to the significance of the revision to the Deposit Insurance Act.

❍ We will strive to further enhance our readiness through workshops, etc. that reflect the skills and know-how we have gained through resolution of the failure of the Incubator Bank.

❍ We will continue to encourage financial institu-tions to redouble their efforts to enhance their preparedness for the repayment of insured deposits, etc. through the inspections of and workshops, etc. for financial institutions.



Treasury Department: Financial Planning and Coordination Division Finance Division I Finance Division II

Deposit Insurance Department: Information System Division Planning Division


Inspection Department: Monitoring & Analysis Division


(ii) Maintenance and improvement of the accuracy of the depositor’s name-based aggregation database at finan-cial institutions

❍ Regarding on-site inspections, we continued to deepen our efforts to seek mutual cooperation between inspections and system verification and conducted “inspections and system verification” at the same time with the aim of improving skills (interoperability) of our staff in the Inspection Department. In addition, with an organic combination of various measures including on-site inspections, improvement hearings, system verification, and training and advice, we strove to maintain and improve the accuracy of the deposi-tor’s name-based aggregation database.

❍ We had DICJ staff, etc., who actually conducted inspections and examinations, sit in and exchange opinions at improvement hearings held by the Financial Services Agency, etc., in an effort to enhance understanding on the part of financial institutions.

❍ As for system verification, we made a decision to notify financial institutions for which we conducted verification of important points toward the improvement of the depositor’s name-based aggregation database with more specific information.

Administrative Year (Note 1)

No. of on-site inspections conducted

FYNo. of system verification conducted

No. of training and advice given

Banks, etc.

Shinkin banks

Credit Cooperatives

2001-2009 830 164 403 263 2001-2009 1,703 689

2010 46 5 27 14 2010 56 27

2011 (Note 2) 57 8 44 5 2011 82 50

Total 933 177 474 282 Total 1,841 766

Notes: 1. An administrative year is a period from July through June of the following year.

2. The number of on-site inspections conducted for the 2011 administrative year is an estimate.

❍ Regarding on-site inspections, improvement hearings, system verification, training and advice, we noted favorable results for achiev-ing the task as financial institutions were encouraged to promote efforts for the effective improvement of the depositor’s name-based aggregation database, etc., through our wcontinued efforts to seek mutual cooperation.

❍ With direct involvement of our staff in the Inspection Department in system verification, we were able to enhance the skills of our staff in the Inspection Department who are in charge of data analysis and expand the scope of verification, etc.

❍ However, there are still differences among financial institutions in the accuracy of the depositor’s name-based aggregation database and we see room for improvement. In addition, financial institutions need to constantly maintain and improve the accuracy of the depositor’s name-based aggregation database based on actual conditions, as they have to respond to the opening of new accounts and changes in data on individual depositors as well as relevant systems.

❍ In order to maintain and improve the accuracy of the depositor’s name-based aggregation database, it is necessary for us to continue to efficiently and effectively implement various measures based on the results of cooperation thus far while enhancing the contents of these measures.

❍ As new inspections will be conducted starting from the next administrative year in order to respond to the revision to the Deposit Insur-ance Act, we are planning to consider inspec-tion policies and plans, implementation of inspection guidelines and provide sufficient training to our staff. In addition, before conducing inspections, we are planning to exchange opinions with financial institutions which will receive inspections sufficiently, as the revised Deposit Insurance Act has been enforced recently.

❍ We will strive to provide information to prevent errors in the development of the depositor’s name-based aggregation database.

Inspection Department: Inspection Planning Division Monitoring and Analysis Division

Deposit Insurance Department: Information System Division Advisory Service Division

III. Annex

99


ICJ’s

Operations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy



(iii) Improvement and expansion of the DICJ’s business operation frame-work, etc., and the establishment of an optimal next-gener-ation system in order to further accelerate the processing of the depositor’s name-based aggregation database and smoothly facilitate the financial admin-istrator operations

❍ In the aspect of business operations, we reexamined and reviewed administrative procedures related to various failure resolution methods.

❍ In the aspect of systems, we continued our efforts through the FY2011 to establish the next-generation failure resolution system and mostly completed the required development. In addition, we developed a systematic and efficient training plan for the administrative work after the launch of the system.

❍ We efficiently improved and expanded business operation framework through the reexamination, review of administrative procedures related to various failure resolution methods, and enhance our operational capabili-ties in the actual practice of failure resolution.

❍ We worked toward the launch of the failure resolution system scheduled in May 2012.

❍ Going forward, on the basis of our experiences with failure resolution of the Incubator Bank assuming various development scenarios, we will proceed with further improvement and expansion of our business operation frame-work. Furthermore, we will further enhance our operational capabilities through continuous training of system operations, etc. based on our newly established failure resolution system.

❍ We will continue to move ahead with efficient system development and conduct training, etc. in order to improve our system operational capabilities.

Deposit Insurance Department: Information System Division

Financial Reconstruction Department:


Planning & Coordination Department:

Planning & Coordination Division

(iv) Consideration of matters necessary for ensuring the smooth operation of the deposit insurance system, and enhancement of cooperation with the relevant authorities

❍ We responded to inquiries from financial institutions, etc., about the deposit insurance system (for example, inquiries about whether individual transactions fall under the category of settlement obligations, and whether new financial products are protected under deposit insurance) and continued to consider necessary matters including improvements to the failure resolution scheme. We also strengthened our cooperation with the relevant authorities on failure resolution and made use of stronger ties for failure resolution.

❍ We also held meetings with other safety net participants (in May 2011 and February 2012) in an effort to strengthen relationships.

❍ We appropriately handled inquiries about the deposit insurance system, studied matters necessary for ensuring the smooth operation of the deposit insurance system, including the failure resolution scheme, and leveraged these experiences for failure resolution.

❍ We also promoted cooperation with the relevant authorities and other safety net participants at the time of failure resolution and on other occasions.

❍ We will continue to consider necessary matters from the perspective of ensuring the smooth operation of the deposit insurance system and seek to further strengthen cooperation of the relevant authorities and other safety net participants.

Deposit Insurance Department: Planning Division



2. Public Relations Activities Related to the Deposit Insurance System and the DICJ’s Operations

Public relations activi-ties related to the Deposit Insurance System and the DICJ’s operations utilizing various media

❍ To deepen depositors’ understanding of the deposit insurance system, we completely revised the design of the DICJ website into a friendly and easy-to-use one, improved and expanded the contents, and organized the information posted on the website (in March 2012).

❍ We strove to make the deposit insurance system and the DICJ’s operations widely known through such efforts as the publication of about 800,000 copies of brochures for depositors, “Understanding the Deposit Insurance System with Comics” and “Operations of the Deposit Insurance Corporation of Japan,” and the distribution of them to the institutions concerned; and the timely uploading of information related to the DICJ’s measures, in particular, the failure resolution of the Incubator Bank, on the DICJ website and the provision of such information to the mass media as needed.

[Questionnaire survey on the recognition of the deposit insurance system, etc.]

Recognition of the deposit insurance system FY2009 FY2010 FY2011

I know it 82.9% 76.1% 78.9%

I know its content 28.6% 28.1% 31.0%

I have only seen or heard it 54.3% 48.0% 47.9%

I know nothing about it 17.0% 23.9% 21.1%

❍ Since the results of the survey suggests that more than 30% of respondents did know the content of the deposit insurance system, we note the results of our efforts to utilize various media in public relations activities related to the deposit insurance system and the DICJ’s operations.

❍ In line with the policy of implementing easy-to-understand public relations activities from the perspective of depositors, we will continue to strive to enhance and improve our initiatives and implement new measures using the results of the questionnaire survey and the access status of the DICJ website as a reference.


Public Relations & Information, Management Office


100

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

I. DIC

J’sO

perationsIII. A

nnexII. O

verview

of the DIC

J’s A

ctivities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy



(iii) Improvement and expansion of the DICJ’s business operation frame-work, etc., and the establishment of an optimal next-gener-ation system in order to further accelerate the processing of the depositor’s name-based aggregation database and smoothly facilitate the financial admin-istrator operations

❍ In the aspect of business operations, we reexamined and reviewed administrative procedures related to various failure resolution methods.

❍ In the aspect of systems, we continued our efforts through the FY2011 to establish the next-generation failure resolution system and mostly completed the required development. In addition, we developed a systematic and efficient training plan for the administrative work after the launch of the system.

❍ We efficiently improved and expanded business operation framework through the reexamination, review of administrative procedures related to various failure resolution methods, and enhance our operational capabili-ties in the actual practice of failure resolution.

❍ We worked toward the launch of the failure resolution system scheduled in May 2012.

❍ Going forward, on the basis of our experiences with failure resolution of the Incubator Bank assuming various development scenarios, we will proceed with further improvement and expansion of our business operation frame-work. Furthermore, we will further enhance our operational capabilities through continuous training of system operations, etc. based on our newly established failure resolution system.

❍ We will continue to move ahead with efficient system development and conduct training, etc. in order to improve our system operational capabilities.

Deposit Insurance Department: Information System Division





(iv) Consideration of matters necessary for ensuring the smooth operation of the deposit insurance system, and enhancement of cooperation with the relevant authorities

❍ We responded to inquiries from financial institutions, etc., about the deposit insurance system (for example, inquiries about whether individual transactions fall under the category of settlement obligations, and whether new financial products are protected under deposit insurance) and continued to consider necessary matters including improvements to the failure resolution scheme. We also strengthened our cooperation with the relevant authorities on failure resolution and made use of stronger ties for failure resolution.

❍ We also held meetings with other safety net participants (in May 2011 and February 2012) in an effort to strengthen relationships.

❍ We appropriately handled inquiries about the deposit insurance system, studied matters necessary for ensuring the smooth operation of the deposit insurance system, including the failure resolution scheme, and leveraged these experiences for failure resolution.

❍ We also promoted cooperation with the relevant authorities and other safety net participants at the time of failure resolution and on other occasions.

❍ We will continue to consider necessary matters from the perspective of ensuring the smooth operation of the deposit insurance system and seek to further strengthen cooperation of the relevant authorities and other safety net participants.




2. Public Relations Activities Related to the Deposit Insurance System and the DICJ’s Operations

Public relations activi-ties related to the Deposit Insurance System and the DICJ’s operations utilizing various media

❍ To deepen depositors’ understanding of the deposit insurance system, we completely revised the design of the DICJ website into a friendly and easy-to-use one, improved and expanded the contents, and organized the information posted on the website (in March 2012).

❍ We strove to make the deposit insurance system and the DICJ’s operations widely known through such efforts as the publication of about 800,000 copies of brochures for depositors, “Understanding the Deposit Insurance System with Comics” and “Operations of the Deposit Insurance Corporation of Japan,” and the distribution of them to the institutions concerned; and the timely uploading of information related to the DICJ’s measures, in particular, the failure resolution of the Incubator Bank, on the DICJ website and the provision of such information to the mass media as needed.

[Questionnaire survey on the recognition of the deposit insurance system, etc.]

Recognition of the deposit insurance system FY2009 FY2010 FY2011

I know it 82.9% 76.1% 78.9%

I know its content 28.6% 28.1% 31.0%

I have only seen or heard it 54.3% 48.0% 47.9%

I know nothing about it 17.0% 23.9% 21.1%

❍ Since the results of the survey suggests that more than 30% of respondents did know the content of the deposit insurance system, we note the results of our efforts to utilize various media in public relations activities related to the deposit insurance system and the DICJ’s operations.

❍ In line with the policy of implementing easy-to-understand public relations activities from the perspective of depositors, we will continue to strive to enhance and improve our initiatives and implement new measures using the results of the questionnaire survey and the access status of the DICJ website as a reference.


Public Relations & Information, Management Office

III. Annex

101


ICJ’s

Operations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy



(i) Appropriate execu-tion of operations related to capital injection based on the Financial Functions Strength-ening Act

❍ In FY2011, special measures (special measures concerning the Great East Japan Earthquake) were estab-lished in Financial Functions Strengthening Act in response to the Great East Japan Earthquake with the aim of stabilizing the financial base of the financial institutions affected by the earthquake, maintaining and enhancing financial functions in the disaster areas, and protecting depositors (the revised act was enforced on July 27, 2011). Regarding the earthquake special measures, a capital injection totaling ¥176.5 billion was made into 10 financial institutions by the end of FY2011. As a result, the cumulative total of capital injec-tion under the Act stands at ¥526.0 billion as of the end of FY2011.

[The results of capital injection under the Financial Functions Strengthening Act in FY2011]

Financial institution to which the special measures concerning the earthquake were applied (Article 8 of the appendix to the Act)

September 2011 Sendai Bank (¥30.0 billion, preferred shares)

Tsukuba Bank (¥35.0 billion, preferred shares)

December 2011 77 Bank (¥20.0 billion, subordinated loans)

Specific credit cooperative to which the special measures concerning the earthquake were applied (Article 11 of the appendix to the Act) (Note)

January 2012 Soso Shinkumi Bank (¥13.9 billion, trust beneficiary rights)

Iwaki Shinkumi, Ltd.(¥17.5 billion, trust beneficiary rights)

February 2012 Miyako Shinkin Bank (¥8.5 billion, trust beneficiary rights)

Kesennuma Shinkin Bank (¥13.0 billion, trust beneficiary rights)

Ishinomaki Shinkin Bank (¥15.7 billion, trust beneficiary rights)

Abukuma Shinkin Bank (¥17.5 billion, trust beneficiary rights)

Credit cooperative to which the special measures concerning the earthquake were applied (Article 10 of the appendix to the Act) (Note)

March 2012 Nasu Shinkumi Bank (¥5.4 billion, trust beneficiary rights [preferred beneficiary rights])

Note: The DICJ implemented capital injection by purchasing the trust beneficiary rights related to preferred equity investment issued by the targeted financial institution from the central organization of credit cooperative.

❍ We immediately responded to applications from financial institutions, etc., and appropri-ately implemented capital injection into a total of 10 institutions (3 banks, 7 credit coopera-tives).

❍ At present, some financial institutions have announced they are starting to consider capital injection. We will continue to implement capital injection under the Financial Functions Strengthening Act in a sure and smooth manner in close cooperation with the authorities concerned.



(ii) Appropriate management and disposal of preferred shares and other capital-raising instruments subscribed based on the Early Strengthening Act, Financial Functions Strengthening Act, etc.

❍ We implemented the following operations regarding management and disposal of preferred shares and other capital-raising instruments subscribed for capital injection:• Exercising the voting rights at general meetings of shareholders in line with the “Basic Policy in Exercis-

ing Voting Rights as a Shareholder,” paying heed to the maintenance of the soundness of bank manage-ment, the securing of fund sources for the repayment of public funds and consistency with the purposes of the act that constitutes the basis of capital injection using public funds (5 cases at regular general meetings of shareholders) and exercising the preferred beneficiary rights (1 case, asking questions at a general meeting of preferred investors of a credit cooperative)

• Receipts of dividends (we received a total of ¥25.9 billion in dividends from 17 financial institutions, while 1 financial institutions paid no dividends)

• Holding of hearings with financial institutions that received capital injection about sales and profits for the business term, dividend policy, accumulation of surpluses and future repayment plans, etc., as well as interviews with financial institutions on repayment plans and other individual cases (totally 66 cases)

• Selection of the candidates for the lead manager securities companies (7 companies selected as a result) through public invitation (March 2012) from the perspective of ensuring maneuverability and flexibility related to secondary offerings.

• In FY2011, we received no offers related to the disposal of preferred shares and other capital-raising instruments from financial institutions, etc., and therefore, there were no disposal results.

[Status of disposal (on a book value basis)] (Unit: ¥billion)

FY 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Total 100.0 350.0 — 674.6 947.0 1,401.3 2,274.4 3,112.4 137.0 446.2 60.0 1,286.6 —

Preferred shares, etc.

— 200.0 — — 108.0 786.3 1,934.4 3,092.4 102.0 395.2 60.0 1,286.6 —

Subordi-nated bonds, etc.

100.0 150.0 — 674.6 839.0 615.0 340.0 20.0 35.0 51.0 — — —

Cumulative total 100.0 450.0 450.0 1,124.6 2,071.6 3,472.9 5,747.3 8,859.8 8,996.8 9,443.0 9,503.0 10,789.6 10,789.6

❍ In management and disposal operations, we appropriately exercised shareholder voting rights at regular general meetings of sharehold-ers, etc. We also strove to grasp the implemen-tation status of repayment plans of financial institutions that received capital injection.

❍ In the exercise of shareholder voting rights, we will further strive for the appropriate management of preferred shares and other capital-raising instruments in line with the “Basic Policy in Exercising Voting Rights as a Shareholder.”

❍ We will strive for the smooth disposal of preferred shares and other capital-raising instruments in line with the “Temporary Guide-line for Disposal of Preferred Shares and other Capital-Raising instruments Acquired through Capital Injection.”




102

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

I. DIC

J’sO

perationsIII. A

nnexII. O

verview

of the DIC

J’s A

ctivities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy



(i) Appropriate execu-tion of operations related to capital injection based on the Financial Functions Strength-ening Act

❍ In FY2011, special measures (special measures concerning the Great East Japan Earthquake) were estab-lished in Financial Functions Strengthening Act in response to the Great East Japan Earthquake with the aim of stabilizing the financial base of the financial institutions affected by the earthquake, maintaining and enhancing financial functions in the disaster areas, and protecting depositors (the revised act was enforced on July 27, 2011). Regarding the earthquake special measures, a capital injection totaling ¥176.5 billion was made into 10 financial institutions by the end of FY2011. As a result, the cumulative total of capital injec-tion under the Act stands at ¥526.0 billion as of the end of FY2011.

[The results of capital injection under the Financial Functions Strengthening Act in FY2011]

Financial institution to which the special measures concerning the earthquake were applied (Article 8 of the appendix to the Act)

September 2011 Sendai Bank (¥30.0 billion, preferred shares)

Tsukuba Bank (¥35.0 billion, preferred shares)

December 2011 77 Bank (¥20.0 billion, subordinated loans)

Specific credit cooperative to which the special measures concerning the earthquake were applied (Article 11 of the appendix to the Act) (Note)

January 2012 Soso Shinkumi Bank (¥13.9 billion, trust beneficiary rights)

Iwaki Shinkumi, Ltd.(¥17.5 billion, trust beneficiary rights)

February 2012 Miyako Shinkin Bank (¥8.5 billion, trust beneficiary rights)

Kesennuma Shinkin Bank (¥13.0 billion, trust beneficiary rights)

Ishinomaki Shinkin Bank (¥15.7 billion, trust beneficiary rights)

Abukuma Shinkin Bank (¥17.5 billion, trust beneficiary rights)

Credit cooperative to which the special measures concerning the earthquake were applied (Article 10 of the appendix to the Act) (Note)

March 2012 Nasu Shinkumi Bank (¥5.4 billion, trust beneficiary rights [preferred beneficiary rights])

Note: The DICJ implemented capital injection by purchasing the trust beneficiary rights related to preferred equity investment issued by the targeted financial institution from the central organization of credit cooperative.

❍ We immediately responded to applications from financial institutions, etc., and appropri-ately implemented capital injection into a total of 10 institutions (3 banks, 7 credit coopera-tives).

❍ At present, some financial institutions have announced they are starting to consider capital injection. We will continue to implement capital injection under the Financial Functions Strengthening Act in a sure and smooth manner in close cooperation with the authorities concerned.



(ii) Appropriate management and disposal of preferred shares and other capital-raising instruments subscribed based on the Early Strengthening Act, Financial Functions Strengthening Act, etc.

❍ We implemented the following operations regarding management and disposal of preferred shares and other capital-raising instruments subscribed for capital injection:• Exercising the voting rights at general meetings of shareholders in line with the “Basic Policy in Exercis-

ing Voting Rights as a Shareholder,” paying heed to the maintenance of the soundness of bank manage-ment, the securing of fund sources for the repayment of public funds and consistency with the purposes of the act that constitutes the basis of capital injection using public funds (5 cases at regular general meetings of shareholders) and exercising the preferred beneficiary rights (1 case, asking questions at a general meeting of preferred investors of a credit cooperative)

• Receipts of dividends (we received a total of ¥25.9 billion in dividends from 17 financial institutions, while 1 financial institutions paid no dividends)

• Holding of hearings with financial institutions that received capital injection about sales and profits for the business term, dividend policy, accumulation of surpluses and future repayment plans, etc., as well as interviews with financial institutions on repayment plans and other individual cases (totally 66 cases)

• Selection of the candidates for the lead manager securities companies (7 companies selected as a result) through public invitation (March 2012) from the perspective of ensuring maneuverability and flexibility related to secondary offerings.

• In FY2011, we received no offers related to the disposal of preferred shares and other capital-raising instruments from financial institutions, etc., and therefore, there were no disposal results.

[Status of disposal (on a book value basis)] (Unit: ¥billion)

FY 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Total 100.0 350.0 — 674.6 947.0 1,401.3 2,274.4 3,112.4 137.0 446.2 60.0 1,286.6 —

Preferred shares, etc.

— 200.0 — — 108.0 786.3 1,934.4 3,092.4 102.0 395.2 60.0 1,286.6 —

Subordi-nated bonds, etc.

100.0 150.0 — 674.6 839.0 615.0 340.0 20.0 35.0 51.0 — — —

Cumulative total 100.0 450.0 450.0 1,124.6 2,071.6 3,472.9 5,747.3 8,859.8 8,996.8 9,443.0 9,503.0 10,789.6 10,789.6

❍ In management and disposal operations, we appropriately exercised shareholder voting rights at regular general meetings of sharehold-ers, etc. We also strove to grasp the implemen-tation status of repayment plans of financial institutions that received capital injection.

❍ In the exercise of shareholder voting rights, we will further strive for the appropriate management of preferred shares and other capital-raising instruments in line with the “Basic Policy in Exercising Voting Rights as a Shareholder.”

❍ We will strive for the smooth disposal of preferred shares and other capital-raising instruments in line with the “Temporary Guide-line for Disposal of Preferred Shares and other Capital-Raising instruments Acquired through Capital Injection.”



III. Annex

103


ICJ’s

Operations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy


4. Support for the Resolution and Collection Operations of the Contracted Bank, including a Strict Response to Malicious Obstructed Recovery Cases and the Appropriate Execution of Operations to Pursue the Liability, and the Appropriate Execution of Purchase and Collection Operations of Specified Difficult Recovery Claims Held by Financial Institutions based on the Revised Deposit Insurance Act

(i) Guidance and advice to support the resolution and collection opera-tions, including strict responses to obstructed recovery cases involving antisocial forces, etc.

❍ In FY2011, we provided the RCC with detailed guidance and advice in preparation for criminal charges, etc. As a result, in obstructed recovery cases involving debtors, we brought charges of obstructing competi-tive auctions, etc., against 6 persons in 5 cases.

❍ Of these cases, regarding especially difficult recovery cases, the DICJ and the RCC are jointly making efforts for the implementation of strong collection measures based on the multifaceted application of the relevant civil and criminal laws and regulations. In FY2011, as the cases involving antisocial forces, we brought criminal charges against 5 persons in 4 cases, including the case of bringing criminal charges of obstructing competitive auctions, etc., against the leader of a gang affiliated with Yamaguchi-gumi, a designated antisocial forces crime syndicate, who used a house that was the RCC’s collateral as their office with the president of a construction company who was the accomplice.

❍ We were able to achieve a measure of results as a result of providing the RCC with guidance and advice focusing on the preparation for criminal charges in cases involving antisocial forces.

❍ By focusing on cases involving antisocial forces, we will provide proactive guidance and advice, and promote investigation activities for the appropriate collection and criminal charges against malicious debtors, etc.


Osaka Operation Department: Investigation and Recovery Division

(ii) Accurate selection of cases to be investigated, and appropriate imple-mentation of in-depth asset investigations

[Accurate selection of cases to be investigated]❍ In consideration of the circumstances, including the reduced system at the RCC and the assignment of our

staff to financial administrator operations, we strove for the accurate selection of cases to be investigated by sending DICJ staff to RCC offices and conducting hearings about information on debtors, etc. after strictly selecting cases about which we would consult with the RCC. We also gave consideration to the decision of cases to be treated preferentially.

[In-depth asset investigation]❍ In an effort to identify concealed assets and clarify the actual conditions of debtors, we made inquiries in

writing to and conducted on-site investigations of financial institutions, etc., to clarify the flows of funds involving debtors, etc., and whom the funds belong to. In this way, we strove to conduct efficient investiga-tions and carried out in-depth asset investigations in accordance with the contents of investigation cases.

❍ In particular, we increased the amount of business operations on a priority basis, carried out thorough investigations of malicious debtors, including antisocial forces, using all sorts of investigation techniques, and strove to discover assets, such as deposits and real estate property, concealed with the use of third-party names.

[Examinations and consultations with the RCC] [Results of asset investigations]

Category FY2010 FY2011 Category FY2010 FY2011

No. of consultations 111 52 No. of investigations 117 (20) 54 (12)

No. of examinations 1,407(138) 326(42) No. of investigations launched 47 (9) 22 (6)

Amount of assets identified¥3.6 billion

(¥0.5 billion)¥1.3 billion

(¥0.04 billion)

Note: Figures in parentheses are for cases involving antisocial forces.

[Guidance and advice based on asset investigations]❍ We provided the RCC with guidance and advice on the gathering of information, etc., on debtors, etc., as

needed, for the appropriate collection of claims from general assets (non-collateral assets) utilizing the asset investigation power granted to the DICJ. We also expeditiously provided the RCC with the results of asset investigations, and provided guidance and advice on how to deal with debtors subsequently in accordance with their actual conditions.

❍ As a result of sending DICJ staff to the RCC for examination of and consultation on malicious debtors, including antisocial forces, we were able to accurately select cases related to debtors deemed to be malicious.

❍ While methods used for asset concealment are getting more malicious and sophisticated, we supported the claim collection operations of the RCC by conducting thorough investigations and identifying concealed assets through the clarification of the actual conditions surround-ing assets of malicious debtors, etc., including antisocial forces.

❍ As we provided guidance and advice to the RCC on the results of asset investigations conducted by the DICJ and legal actions, etc., based on them, we believe that we are contrib-uting to the appropriate execution of the collec-tion operations by the RCC.

❍ We will continue to appropriately implement in-depth asset investigations after conducting an accurate selection of cases to be investi-gated, including specified difficult recovery claims, etc., and a decision of the priority of cases to be undertaken in order to support the resolution and collection operations undertaken by the RCC, a contracted bank.

Special Investigation Department: Special Investigation Division I Special Investigation Division II Special Investigation Division III

Osaka Operation Department: Special Investigation Division I Special Investigation Division II

(iii) Appropriate implementation of thorough investi-gations on failed financial institu-tions and penal and civil liability pursuit operations

❍ In dealing with the failure of the Incubator Bank, as we did in FY2010, we conducted a thorough investiga-tion, including hearings on and the collection and analysis of materials, etc., from large borrowers, etc., including companies participating in the “Incubator Network for SMEs” made up of companies with close ties to the Incubator Bank, to clarify developments, etc., that led to the bank’s failure and the flow of funds, etc.

❍ As a result of these investigation activities, regarding the transaction of purchasing loan claims from SFCG Co., Ltd., it was found out that former Incubator Bank executive officers committed violations of good manager’s duty of due care as a director. Therefore, the RCC that took over the claims to seek damages from Incubator Bank brought a lawsuit for damages, etc., totaling 5 billion yen against 7 persons including the former Chairman of Incubator Bank in August 2011.

❍ We appropriately implemented the pursuit of civil liabilities of former top management of failed financial institutions. For example, we brought a lawsuit for damages, etc., totaling 5 billion yen against 7 persons including the former Chairman in August 2011.

❍ If continued investigation activities related to the Incubator Bank lead us to conclude that liability should be pursued, we will continue to take steps expeditiously to pursue civil and criminal liabilities.


Osaka Operation Department:Investigation and Recovery Division


104

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

I. DIC

J’sO

perationsIII. A

nnexII. O

verview

of the DIC

J’s A

ctivities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy



(i) Guidance and advice to support the resolution and collection opera-tions, including strict responses to obstructed recovery cases involving antisocial forces, etc.

❍ In FY2011, we provided the RCC with detailed guidance and advice in preparation for criminal charges, etc. As a result, in obstructed recovery cases involving debtors, we brought charges of obstructing competi-tive auctions, etc., against 6 persons in 5 cases.

❍ Of these cases, regarding especially difficult recovery cases, the DICJ and the RCC are jointly making efforts for the implementation of strong collection measures based on the multifaceted application of the relevant civil and criminal laws and regulations. In FY2011, as the cases involving antisocial forces, we brought criminal charges against 5 persons in 4 cases, including the case of bringing criminal charges of obstructing competitive auctions, etc., against the leader of a gang affiliated with Yamaguchi-gumi, a designated antisocial forces crime syndicate, who used a house that was the RCC’s collateral as their office with the president of a construction company who was the accomplice.

❍ We were able to achieve a measure of results as a result of providing the RCC with guidance and advice focusing on the preparation for criminal charges in cases involving antisocial forces.

❍ By focusing on cases involving antisocial forces, we will provide proactive guidance and advice, and promote investigation activities for the appropriate collection and criminal charges against malicious debtors, etc.


Osaka Operation Department: Investigation and Recovery Division

(ii) Accurate selection of cases to be investigated, and appropriate imple-mentation of in-depth asset investigations

[Accurate selection of cases to be investigated]❍ In consideration of the circumstances, including the reduced system at the RCC and the assignment of our

staff to financial administrator operations, we strove for the accurate selection of cases to be investigated by sending DICJ staff to RCC offices and conducting hearings about information on debtors, etc. after strictly selecting cases about which we would consult with the RCC. We also gave consideration to the decision of cases to be treated preferentially.

[In-depth asset investigation]❍ In an effort to identify concealed assets and clarify the actual conditions of debtors, we made inquiries in

writing to and conducted on-site investigations of financial institutions, etc., to clarify the flows of funds involving debtors, etc., and whom the funds belong to. In this way, we strove to conduct efficient investiga-tions and carried out in-depth asset investigations in accordance with the contents of investigation cases.

❍ In particular, we increased the amount of business operations on a priority basis, carried out thorough investigations of malicious debtors, including antisocial forces, using all sorts of investigation techniques, and strove to discover assets, such as deposits and real estate property, concealed with the use of third-party names.

[Examinations and consultations with the RCC] [Results of asset investigations]

Category FY2010 FY2011 Category FY2010 FY2011

No. of consultations 111 52 No. of investigations 117 (20) 54 (12)

No. of examinations 1,407(138) 326(42) No. of investigations launched 47 (9) 22 (6)

Amount of assets identified¥3.6 billion


(¥0.04 billion)

Note: Figures in parentheses are for cases involving antisocial forces.

[Guidance and advice based on asset investigations]❍ We provided the RCC with guidance and advice on the gathering of information, etc., on debtors, etc., as

needed, for the appropriate collection of claims from general assets (non-collateral assets) utilizing the asset investigation power granted to the DICJ. We also expeditiously provided the RCC with the results of asset investigations, and provided guidance and advice on how to deal with debtors subsequently in accordance with their actual conditions.

❍ As a result of sending DICJ staff to the RCC for examination of and consultation on malicious debtors, including antisocial forces, we were able to accurately select cases related to debtors deemed to be malicious.

❍ While methods used for asset concealment are getting more malicious and sophisticated, we supported the claim collection operations of the RCC by conducting thorough investigations and identifying concealed assets through the clarification of the actual conditions surround-ing assets of malicious debtors, etc., including antisocial forces.

❍ As we provided guidance and advice to the RCC on the results of asset investigations conducted by the DICJ and legal actions, etc., based on them, we believe that we are contrib-uting to the appropriate execution of the collec-tion operations by the RCC.

❍ We will continue to appropriately implement in-depth asset investigations after conducting an accurate selection of cases to be investi-gated, including specified difficult recovery claims, etc., and a decision of the priority of cases to be undertaken in order to support the resolution and collection operations undertaken by the RCC, a contracted bank.

Special Investigation Department: Special Investigation Division I Special Investigation Division II Special Investigation Division III

Osaka Operation Department: Special Investigation Division I Special Investigation Division II

(iii) Appropriate implementation of thorough investi-gations on failed financial institu-tions and penal and civil liability pursuit operations

❍ In dealing with the failure of the Incubator Bank, as we did in FY2010, we conducted a thorough investiga-tion, including hearings on and the collection and analysis of materials, etc., from large borrowers, etc., including companies participating in the “Incubator Network for SMEs” made up of companies with close ties to the Incubator Bank, to clarify developments, etc., that led to the bank’s failure and the flow of funds, etc.

❍ As a result of these investigation activities, regarding the transaction of purchasing loan claims from SFCG Co., Ltd., it was found out that former Incubator Bank executive officers committed violations of good manager’s duty of due care as a director. Therefore, the RCC that took over the claims to seek damages from Incubator Bank brought a lawsuit for damages, etc., totaling 5 billion yen against 7 persons including the former Chairman of Incubator Bank in August 2011.

❍ We appropriately implemented the pursuit of civil liabilities of former top management of failed financial institutions. For example, we brought a lawsuit for damages, etc., totaling 5 billion yen against 7 persons including the former Chairman in August 2011.

❍ If continued investigation activities related to the Incubator Bank lead us to conclude that liability should be pursued, we will continue to take steps expeditiously to pursue civil and criminal liabilities.


Osaka Operation Department:Investigation and Recovery Division

III. Annex

105


ICJ’s

Operations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy



(iv) Improvement of the framework for purchase and collection opera-tions of specified difficult recovery claims and the appropriate implementation of operations

❍ Following the enactment of a bill to revise the Deposit Insurance Act to include the purchase and collection of specified difficult recovery claims in the DICJ’s operations, the DICJ established a third-party committee for the implementation of purchase operations and selected committee members, and prepared various provisions.

❍ We coordinated views with the related ministries and agencies and formulated the “Guideline for Purchase of Specified Difficult Recovery Claims” that stipulated the scope of purchase (issued on October 29, 2011).

❍ To ensure the implementation of the purchase operations, we formulated a framework for the provision of information that would contribute to deciding the conformity of specified difficult recovery claims between the National Police Agency and the DICJ.

❍ In preparation for purchase operations in FY2012, we conducted activities to increase the awareness of industry groups and financial institutions of the system, including the holding of explanatory meetings (11 regional explanatory meetings, 2 explanatory sessions for industry groups, 5 seminar lectures, and 3 explan-atory sessions through various meetings). In addition, regarding the purchase operations, we responded to 91 questions concerning the system and 61 consultations concerning individual cases from 67 financial institutions, etc.

❍ Toward the purchase of specified difficult recovery claims in FY2012, we improved and enhanced the framework.

❍ By conducting activities to increase awareness, financial institutions’ awareness of the purchase operations increased, and we received questions and consultations from many financial institutions.

❍ In preparation for the first purchase, we will proceed with the appropriate purchase procedures based on the opinions of the third-party committee.

❍ Based on requests for this system from private financial institutions and our experience of the first purchase, we will conduct a necessary review of the operations in cooperation with the authorities concerned.



5. Appropriate Management, Disposal, etc., of Retained Assets

Implementation of appropriate and efficient management and disposal of claims, shares, etc., acquired from failed financial institutions, etc., and appropriate implemen-tation of financial assistance to the bridge bank, etc.

[Management and disposal by the Resolution and Collection Corporation]❍ The RCC has been engaged in the collection of claims guided by the basic principle of minimizing the

public burden. For Jusen claims, claims purchased from failed financial institutions, and claims purchased under Article 53 of the Financial Revitalization Act, in FY2011, the RCC collected ¥110.6 billion worth of claims against a collection target of ¥62.0 billion, with the cumulative total of collections coming to ¥9,746.5 billion (equivalent to 99.8% of the book value of transferred claims). The RCC also made payments to the DICJ equivalent to the amount of profits gained on the collection of claims minus losses incurred in the collection and collection expense (¥33.8 billion in FY2011) (the deadline for payments for FY2011 is June 2012). The DICJ provided the RCC with guidance and advice so that the RCC would attempt to collect claims in a careful manner by following all necessary procedures in accordance with the “Basic Policy for the Management of Customer Protection, etc.” formulated by the DICJ. In addition, the RCC held meetings (to be held semiannually) of the Complaint Processing Committee established in FY2010 from the perspective of ensuring appropriate processing of complaints and inquiries, etc., from customers in order to reflect outside experts’ opinions in business operations, taking seriously customers’ complaints, consultations, etc., and utilizing them in business operations.

❍ Regarding Jusen claims, we completed collection, disposal, etc., by the end of December 2011, within 15 years, according to the original plan made in 1996.

[Management and disposal of claims subject to the warranty for latent defect provision]❍ The DICJ took over claims from the former Long-Term Credit Bank of Japan and the former Nippon Credit

Bank based on the warranty for latent defect provision prescribed in the share sales agreements (the takeover was completed in FY2004). In FY2011, the DICJ collected ¥2.4 billion of these claims (for a cumulative collection amount of ¥667.9 billion).

[Management and disposal of shares purchased from banks under special public management (shares placed in trust)]❍ The DICJ suspended the sale of exchange-listed shares in the market from October 15, 2008, in principle, in

line with the government’s policy. Thus, the DICJ carried out the disposal of shares worth ¥0.2 billion only as exceptional transactions, in response to tender offers by others, etc. The DICJ also achieved the sale of unlisted shares worth ¥0.8 billion in response to the requests for the sale to third parties designated by issuing companies, etc.

[Financial assistance concerning the Incubator Bank]❍ In implementing the failure resolution of the Incubator Bank, we provided financial assistance to the Second

Bridge Bank of Japan (2nd BBJ) for its taking over some operations of the Incubator Bank.

[Financial assistance to assuming financial institutions, etc.]

Date of implementation

Date of decision by Policy Board

Assuming financial

institutions, etc.

Failed financial

institutionsAssistance method Amount

April 25, 2011

April 15, 2011 (September 27, 2011)


April 15, 2011

2nd BBJIncubator

Bank

Monetary grant(after the amount is decreased)

Equitable financial assistance (Note 1)

(after the amount is increased)Purchase of assets (Note 2)

¥104.1 billion(¥46.1 billion)¥65.6 billion


❍ The DICJ provided the RCC with guidance and advice so that the RCC would attempt to collect claims in a deliberate manner by follow-ing all necessary procedures in accordance with the “basic policy for the management including customer protection.” In such a situation, the RCC collected more claims than the collection target.

❍ Regarding Jusen claims, we appropriately implemented their collection, disposal, etc., according to the original plan.

❍ Regarding the management and disposal of claims subject to the warranty for latent defect provision, we endeavored to maximize collec-tion based on the basic philosophy of the maximization of collection and the clarification of management responsibility.

❍ Regarding the management and disposal of shares purchased from banks under special public management, the disposal of shares placed in trust performed poorly as a whole as the sale of exchange-listed shares in the market has remained suspended, in principle.

❍ Regarding the failure resolution of the Incuba-tor Bank, we first provided financial assistance through limited coverage of deposits, etc. Although we were required to make expedi-tious responses, we were able to take appropri-ate action so that the transfer of the business operations and the revitalization plan would be implemented by not only providing monetary grants to assuming financial institutions, but also providing equitable financial assistance and additional equitable financial assistance to failed financial institutions.

❍ We will continue to proceed with appropriate and efficient management and disposal while striving to enhance the protection of customers and comply with laws and regulations, etc.

❍ We will continue to proceed with appropriate management and disposal of Jusen claims that were transferred to the RCC’s post-contract account.

❍ Regarding the management and disposal of claims subject to the warranty for latent defect provision, we will continue to endeavor to maximize collection in accordance with the philosophy described in the left column.

❍ Regarding the management and disposal of shares purchased from banks under special public management, we will continue to take appropriate responses based on market trends and the economic situation.

❍ We will continue to provide appropriate financial assistance by increasing and decreas-ing monetary grants concerning the Incubator Bank etc.,





Deposit Insurance Department: Financial Assistance Division

Special Investigation Department: Investigation and Planning Division

Osaka Operation Department: Administration Policy, Planning, and Coordination Division, Financial Assistance Division



106

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

I. DIC

J’sO

perationsIII. A

nnexII. O

verview

of the DIC

J’s A

ctivities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy



(iv) Improvement of the framework for purchase and collection opera-tions of specified difficult recovery claims and the appropriate implementation of operations

❍ Following the enactment of a bill to revise the Deposit Insurance Act to include the purchase and collection of specified difficult recovery claims in the DICJ’s operations, the DICJ established a third-party committee for the implementation of purchase operations and selected committee members, and prepared various provisions.

❍ We coordinated views with the related ministries and agencies and formulated the “Guideline for Purchase of Specified Difficult Recovery Claims” that stipulated the scope of purchase (issued on October 29, 2011).

❍ To ensure the implementation of the purchase operations, we formulated a framework for the provision of information that would contribute to deciding the conformity of specified difficult recovery claims between the National Police Agency and the DICJ.

❍ In preparation for purchase operations in FY2012, we conducted activities to increase the awareness of industry groups and financial institutions of the system, including the holding of explanatory meetings (11 regional explanatory meetings, 2 explanatory sessions for industry groups, 5 seminar lectures, and 3 explan-atory sessions through various meetings). In addition, regarding the purchase operations, we responded to 91 questions concerning the system and 61 consultations concerning individual cases from 67 financial institutions, etc.

❍ Toward the purchase of specified difficult recovery claims in FY2012, we improved and enhanced the framework.

❍ By conducting activities to increase awareness, financial institutions’ awareness of the purchase operations increased, and we received questions and consultations from many financial institutions.

❍ In preparation for the first purchase, we will proceed with the appropriate purchase procedures based on the opinions of the third-party committee.

❍ Based on requests for this system from private financial institutions and our experience of the first purchase, we will conduct a necessary review of the operations in cooperation with the authorities concerned.




Implementation of appropriate and efficient management and disposal of claims, shares, etc., acquired from failed financial institutions, etc., and appropriate implemen-tation of financial assistance to the bridge bank, etc.

[Management and disposal by the Resolution and Collection Corporation]❍ The RCC has been engaged in the collection of claims guided by the basic principle of minimizing the

public burden. For Jusen claims, claims purchased from failed financial institutions, and claims purchased under Article 53 of the Financial Revitalization Act, in FY2011, the RCC collected ¥110.6 billion worth of claims against a collection target of ¥62.0 billion, with the cumulative total of collections coming to ¥9,746.5 billion (equivalent to 99.8% of the book value of transferred claims). The RCC also made payments to the DICJ equivalent to the amount of profits gained on the collection of claims minus losses incurred in the collection and collection expense (¥33.8 billion in FY2011) (the deadline for payments for FY2011 is June 2012). The DICJ provided the RCC with guidance and advice so that the RCC would attempt to collect claims in a careful manner by following all necessary procedures in accordance with the “Basic Policy for the Management of Customer Protection, etc.” formulated by the DICJ. In addition, the RCC held meetings (to be held semiannually) of the Complaint Processing Committee established in FY2010 from the perspective of ensuring appropriate processing of complaints and inquiries, etc., from customers in order to reflect outside experts’ opinions in business operations, taking seriously customers’ complaints, consultations, etc., and utilizing them in business operations.

❍ Regarding Jusen claims, we completed collection, disposal, etc., by the end of December 2011, within 15 years, according to the original plan made in 1996.

[Management and disposal of claims subject to the warranty for latent defect provision]❍ The DICJ took over claims from the former Long-Term Credit Bank of Japan and the former Nippon Credit

Bank based on the warranty for latent defect provision prescribed in the share sales agreements (the takeover was completed in FY2004). In FY2011, the DICJ collected ¥2.4 billion of these claims (for a cumulative collection amount of ¥667.9 billion).

[Management and disposal of shares purchased from banks under special public management (shares placed in trust)]❍ The DICJ suspended the sale of exchange-listed shares in the market from October 15, 2008, in principle, in

line with the government’s policy. Thus, the DICJ carried out the disposal of shares worth ¥0.2 billion only as exceptional transactions, in response to tender offers by others, etc. The DICJ also achieved the sale of unlisted shares worth ¥0.8 billion in response to the requests for the sale to third parties designated by issuing companies, etc.

[Financial assistance concerning the Incubator Bank]❍ In implementing the failure resolution of the Incubator Bank, we provided financial assistance to the Second

Bridge Bank of Japan (2nd BBJ) for its taking over some operations of the Incubator Bank.

[Financial assistance to assuming financial institutions, etc.]

Date of implementation


Assuming financial

institutions, etc.

Failed financial

institutionsAssistance method Amount

April 25, 2011



April 15, 2011

2nd BBJIncubator

Bank

Monetary grant(after the amount is decreased)

Equitable financial assistance (Note 1)

(after the amount is increased)Purchase of assets (Note 2)

¥104.1 billion(¥46.1 billion)¥65.6 billion


❍ The DICJ provided the RCC with guidance and advice so that the RCC would attempt to collect claims in a deliberate manner by follow-ing all necessary procedures in accordance with the “basic policy for the management including customer protection.” In such a situation, the RCC collected more claims than the collection target.

❍ Regarding Jusen claims, we appropriately implemented their collection, disposal, etc., according to the original plan.

❍ Regarding the management and disposal of claims subject to the warranty for latent defect provision, we endeavored to maximize collec-tion based on the basic philosophy of the maximization of collection and the clarification of management responsibility.

❍ Regarding the management and disposal of shares purchased from banks under special public management, the disposal of shares placed in trust performed poorly as a whole as the sale of exchange-listed shares in the market has remained suspended, in principle.

❍ Regarding the failure resolution of the Incuba-tor Bank, we first provided financial assistance through limited coverage of deposits, etc. Although we were required to make expedi-tious responses, we were able to take appropri-ate action so that the transfer of the business operations and the revitalization plan would be implemented by not only providing monetary grants to assuming financial institutions, but also providing equitable financial assistance and additional equitable financial assistance to failed financial institutions.

❍ We will continue to proceed with appropriate and efficient management and disposal while striving to enhance the protection of customers and comply with laws and regulations, etc.

❍ We will continue to proceed with appropriate management and disposal of Jusen claims that were transferred to the RCC’s post-contract account.

❍ Regarding the management and disposal of claims subject to the warranty for latent defect provision, we will continue to endeavor to maximize collection in accordance with the philosophy described in the left column.

❍ Regarding the management and disposal of shares purchased from banks under special public management, we will continue to take appropriate responses based on market trends and the economic situation.

❍ We will continue to provide appropriate financial assistance by increasing and decreas-ing monetary grants concerning the Incubator Bank etc.,





Deposit Insurance Department: Financial Assistance Division


Osaka Operation Department: Administration Policy, Planning, and Coordination Division, Financial Assistance Division


III. Annex

107


ICJ’s

Operations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy



Notes: 1. In addition to monetary grants to assuming financial institutions, we provide monetary grants (equitable financial assistance) to failed financial institution in order to ensure equitable treatment among creditors of failed financial institutions.

2. The purchase of assets include the second purchase of assets (decided by the Policy Board on November 22, 2011 and implemented on November 28, 2011) and the third purchase of assets (decided by the Policy Board on December 6, 2011 and implemented on December 19, 2011).

[Financial assistance to the financial institution concerning re-succession]

Date of Implementation


Re-assuming financial

institution

Assuming financial

institution

Failed financial institutions

Assistance method

Amount

December 26, 2011

December 19, 2011

AEON Bank 2nd BBJ Incubator BankPurchase of

assets¥429,000

[Appropriate management of the completion of liquidation procedures for corporations under liquidation and litigation cases]❍ The DICJ appropriately managed litigation cases in which liquidating corporations, etc., are defendants

through the guidance and advice to corporations under liquidation and cooperation with corporate lawyers. In addition, upon completion of litigation cases, etc., the DICJ provided monetary grants worth ¥1.4 billion.

[Changes in the number of corporations under liquidation and litigation cases]

End of March 2011

April 2011 - March 2012 End of March 2012Increase Decrease

No. of corporations under liquidation 8 — — 8

No. of litigations cases 24 4 13 15

❍ The DICJ first implemented the purchase of assets from financial institution concerning re-succession.

❍ Through cooperation with the related parties, we are able to manage litigation cases appropriately.

❍ Due in part to complexities in outstanding litigation cases, we will continue to appropri-ately respond to them in corporation with corporations under liquidation procedures and corporate lawyers, etc.

6. Appropriate Execution of Operations Related to the Incubator Bank

Appropriate execution of the business opera-tions of the Incubator Bank, including the succession of depositors and the continuance of loans to well-inten-tioned and sound debtors in good faith, and the selection of a final assuming financial institution at an early date

❍ On April 1, 2011, the Incubator Bank and the 2nd BBJ concluded a business transfer contract, and the business transfer of the Incubator Bank to the 2nd BBJ was carried out on April 25. In this transfer of business, the 2nd BBJ took over the assets for which the FSA Commissioner considered it appropriate to be taken over by the 2nd BBJ and debts including insured deposits from the Incubator Bank, while paying attention to the continuance of loans to sound debtors.

❍ The assets which the FSA Commissioner did not consider appropriate to be taken over by the 2nd BBJ were left and remained at the Incubator Bank, and some of which were transferred to the RCC.

❍ On September 30, 2011, the DICJ selected and announced AEON Bank as the final assuming financial institution of the Incubator Bank. On October 20, 2011 the DICJ concluded a stock sales contract to transfer all issued shares of the 2nd BBJ that took over the sound assets, insured deposits, etc., of the Incubator Bank to AEON Bank and executed the transfer of the shares on December 26, 2011.

❍ Regarding the Incubator Bank, a rehabilitation plan was decided and fixed in accordance with civil rehabili-tation proceedings, and based on it, we made the first reimbursement to rehabilitation creditors.

❍ In the failure resolution of the Incubator Bank, we provided financial assistance to the 2nd BBJ (See Task 5).

❍ Through the training programs including practical training that have been implemented thus far, the DICJ has ordinarily addressed various issues. Based on this experience, we executed the business operations of the Incuba-tor Bank appropriately.

❍ We also appropriately implemented the selection of the final assuming financial institu-tion and the operations related to re-assuming while keeping close contact with the organiza-tions concerned.

❍ We will continue to implement the business operations of the Incubator Bank and strive to appropriately complete the management as the financial administrator of the bank.


Planning & Coordination Division Financial Reorganization Division

7. Appropriate Implementation of Public Notice Operations, etc., Related to Procedures for Criminal Accounts Damages Recovery

Smooth implementation of public notice opera-tions, preparations for a system update scheduled for April 2012, and appropriate response to “The Project Team on Issues Surrounding Payments to Deposit Insurance Corporation Stipulated in the Criminal Accounts Damage Recovery Act” of the Financial Services Agency

❍ We handled a variety of inquiries from victims of criminal acts, such as furikome fraud, as well as from financial institutions, posted public notices as scheduled, and appropriately announced the status of imple-mentation of public notices as required under law.

❍ Based on the policy for the system review of public notices, etc., we procured a hardware lease and mainte-nance firm, a carrier, a system operation firm, and a firm of application program upgrading, etc., through general competitive bidding and renewed the hardware, etc., in March 2012. (The upgrading of application programs is scheduled to be completed in December 2012.)

❍ We participated in “The Project Team on Issues Surrounding Payments to Deposit Insurance Corporation Stipulated in the Criminal Accounts Damage Recovery Act” as an observer. Regarding the “specific use of the payments to the Deposit Insurance Corporation,” with the revision of the ordinance of the competent ministry based on the content of the proposals finally summarized by the Project Team, it was decided that they would be used in the two projects of “Provision of scholarships to children of crime victims, etc.” and “Assistance to organizations to support crime victims, etc.” (enforced on April 1, 2012).

❍ We assume that we have smoothly imple-mented the public notice operations as we posted public notices as scheduled.

❍ We were able to steadily proceed with prepara-tions for a system update and renew the hardware, etc., as scheduled.

❍ To appropriately respond to the Project Team described in the left column, we participated as an observer.

❍ We will continue to smoothly implement the public notice operations to contribute to the relief of victims of criminal acts, such as furikome fraud.

❍ Regarding system updates, we will continue to properly proceed with the upgrading operations of application programs.

❍ Regarding payments to the Deposit Insurance Corporation, we will take appropriate action based on the ordinance of the competent ministry that was revised based on the content of the proposals of the Project Team described in the left column.

Treasury Department: Bank Transfer Fraud Recovery


108

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

I. DIC

J’sO

perationsIII. A

nnexII. O

verview

of the DIC

J’s A

ctivities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy



Notes: 1. In addition to monetary grants to assuming financial institutions, we provide monetary grants (equitable financial assistance) to failed financial institution in order to ensure equitable treatment among creditors of failed financial institutions.

2. The purchase of assets include the second purchase of assets (decided by the Policy Board on November 22, 2011 and implemented on November 28, 2011) and the third purchase of assets (decided by the Policy Board on December 6, 2011 and implemented on December 19, 2011).

[Financial assistance to the financial institution concerning re-succession]

Date of Implementation


Re-assuming financial

institution

Assuming financial

institution

Failed financial institutions

Assistance method

Amount

December 26, 2011

December 19, 2011

AEON Bank 2nd BBJ Incubator BankPurchase of

assets¥429,000

[Appropriate management of the completion of liquidation procedures for corporations under liquidation and litigation cases]❍ The DICJ appropriately managed litigation cases in which liquidating corporations, etc., are defendants

through the guidance and advice to corporations under liquidation and cooperation with corporate lawyers. In addition, upon completion of litigation cases, etc., the DICJ provided monetary grants worth ¥1.4 billion.

[Changes in the number of corporations under liquidation and litigation cases]

End of March 2011

April 2011 - March 2012 End of March 2012Increase Decrease

No. of corporations under liquidation 8 — — 8

No. of litigations cases 24 4 13 15

❍ The DICJ first implemented the purchase of assets from financial institution concerning re-succession.

❍ Through cooperation with the related parties, we are able to manage litigation cases appropriately.

❍ Due in part to complexities in outstanding litigation cases, we will continue to appropri-ately respond to them in corporation with corporations under liquidation procedures and corporate lawyers, etc.

6. Appropriate Execution of Operations Related to the Incubator Bank

Appropriate execution of the business opera-tions of the Incubator Bank, including the succession of depositors and the continuance of loans to well-inten-tioned and sound debtors in good faith, and the selection of a final assuming financial institution at an early date

❍ On April 1, 2011, the Incubator Bank and the 2nd BBJ concluded a business transfer contract, and the business transfer of the Incubator Bank to the 2nd BBJ was carried out on April 25. In this transfer of business, the 2nd BBJ took over the assets for which the FSA Commissioner considered it appropriate to be taken over by the 2nd BBJ and debts including insured deposits from the Incubator Bank, while paying attention to the continuance of loans to sound debtors.

❍ The assets which the FSA Commissioner did not consider appropriate to be taken over by the 2nd BBJ were left and remained at the Incubator Bank, and some of which were transferred to the RCC.

❍ On September 30, 2011, the DICJ selected and announced AEON Bank as the final assuming financial institution of the Incubator Bank. On October 20, 2011 the DICJ concluded a stock sales contract to transfer all issued shares of the 2nd BBJ that took over the sound assets, insured deposits, etc., of the Incubator Bank to AEON Bank and executed the transfer of the shares on December 26, 2011.

❍ Regarding the Incubator Bank, a rehabilitation plan was decided and fixed in accordance with civil rehabili-tation proceedings, and based on it, we made the first reimbursement to rehabilitation creditors.

❍ In the failure resolution of the Incubator Bank, we provided financial assistance to the 2nd BBJ (See Task 5).

❍ Through the training programs including practical training that have been implemented thus far, the DICJ has ordinarily addressed various issues. Based on this experience, we executed the business operations of the Incuba-tor Bank appropriately.

❍ We also appropriately implemented the selection of the final assuming financial institu-tion and the operations related to re-assuming while keeping close contact with the organiza-tions concerned.

❍ We will continue to implement the business operations of the Incubator Bank and strive to appropriately complete the management as the financial administrator of the bank.


Planning & Coordination Division Financial Reorganization Division


Smooth implementation of public notice opera-tions, preparations for a system update scheduled for April 2012, and appropriate response to “The Project Team on Issues Surrounding Payments to Deposit Insurance Corporation Stipulated in the Criminal Accounts Damage Recovery Act” of the Financial Services Agency

❍ We handled a variety of inquiries from victims of criminal acts, such as furikome fraud, as well as from financial institutions, posted public notices as scheduled, and appropriately announced the status of imple-mentation of public notices as required under law.

❍ Based on the policy for the system review of public notices, etc., we procured a hardware lease and mainte-nance firm, a carrier, a system operation firm, and a firm of application program upgrading, etc., through general competitive bidding and renewed the hardware, etc., in March 2012. (The upgrading of application programs is scheduled to be completed in December 2012.)

❍ We participated in “The Project Team on Issues Surrounding Payments to Deposit Insurance Corporation Stipulated in the Criminal Accounts Damage Recovery Act” as an observer. Regarding the “specific use of the payments to the Deposit Insurance Corporation,” with the revision of the ordinance of the competent ministry based on the content of the proposals finally summarized by the Project Team, it was decided that they would be used in the two projects of “Provision of scholarships to children of crime victims, etc.” and “Assistance to organizations to support crime victims, etc.” (enforced on April 1, 2012).

❍ We assume that we have smoothly imple-mented the public notice operations as we posted public notices as scheduled.

❍ We were able to steadily proceed with prepara-tions for a system update and renew the hardware, etc., as scheduled.

❍ To appropriately respond to the Project Team described in the left column, we participated as an observer.

❍ We will continue to smoothly implement the public notice operations to contribute to the relief of victims of criminal acts, such as furikome fraud.

❍ Regarding system updates, we will continue to properly proceed with the upgrading operations of application programs.

❍ Regarding payments to the Deposit Insurance Corporation, we will take appropriate action based on the ordinance of the competent ministry that was revised based on the content of the proposals of the Project Team described in the left column.

Treasury Department: Bank Transfer Fraud Recovery

III. Annex

109


ICJ’s

Operations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy



[Status of posting of major public notices]

Public notices on the start of procedures for extinction of

claims on bank deposit accounts

Public notices on the start of procedures for the payment of

damage-recovery benefits

Public notices on the comple-tion of procedures for the

payment of damage-recovery benefits

No. of public notices 24 No. of public notices 24 No. of public notices 24

No. of financial situations 484 No. of financial institutions 357 No. of financial institutions 300

No. of deposit accounts 31,801 No. of deposit accounts 16,243 Amount of deposits, etc. ¥1,494 million

Amount of deposits, etc. ¥3,034 million Amount of deposits, etc. ¥2,086 million Payments of benefits to victims ¥1,111 million

8. Cooperation and Collaboration with Affiliated Companies

(i) Appropriate execu-tion of the opera-tions of the disposal of “Jusen claims,” etc., review of the RCC’s role in view of the revision to the Deposit Insurance Act, and provision of necessary guidance and advice to the RCC’s collection of claims in the affected areas of the Great East Japan Earthquake

❍ Regarding the disposal of secondary losses of Jusen claims, we implemented the following schemes agreed among related parties concerned: • The burden of the secondary loss arising from the collection of Jusen claims totaling ¥1,401.7 billion was

equally shared by the government and the private sector in accordance with the initial policy.• The government burden was covered by relevant funds without invoking any new fiscal measures.• The private burden portion was covered by the profit from the management of the Financial Stabilization

Contribution Fund, equivalent amount of investment made in the RCC from the Financial Stabilization Contribution Fund, and the transfer of funds from the General Account of the DICJ.

❍ Regarding operations related to the bridge bank function, we concluded a bridge bank function agreement with the RCC in November 2011 and held management-level and working-level discussions with the RCC to improve and enhance the framwork.

❍ Regarding the purchase framework of specified difficult recovery claims, we held working-level discussions with the RCC to improve and enhance it.

❍ We provided guidance and advice so that the RCC would make appropriate responses to the postponement of repayments, extension of deadlines, etc., based on the offers from debtors located in the affected areas of the Great East Japan Earthquake.

❍ We attended a meeting of the Compliance Committee of the RCC and delivered appropriate opinions as a member. At meetings of the Liaison Conference on Operational Improvements, etc., we held hearings on the protection of customers and compliance, and provided guidance and advice that would contribute to the improvement of operations.

❍ We steadily implemented schemes toward the completion of the Jusen resolution.

❍ We proceeded with the improvement of the framework for the bridge bank operations and the purchase operations of specified difficult recovery claims.

❍ We provided necessary guidance and advice from the standpoint of ensuring the appropriate management of the RCC.

❍ Toward the close of the Jusen Account, we will appropriately implement procedures including the return of the Financial Stabilization Contribution Fund to contributors.

❍ We will continue to establish a more appropri-ate and efficient framework for bridge bank operations and purchase operations for speci-fied difficult recovery claims.

❍ We will continue to follow up on the status of customer protection and compliance of the RCC and provide necessary guidance and advice for its appropriate business operations.



Treasury Department: Financial Planning and Coordination Division




Osaka Operation Department: Administration, Policy Planning and Coordination Division

(ii) Cooperation in the appropriate and efficient implemen-tation of the operations of Enter-prise Turnaround Initiative Corpora-tion of Japan

[Enterprise Turnaround Initiative Corporation of Japan]❍ We appropriately exercised our voting rights by attending an ordinary general meeting of shareholders.

[Corporation for Revitalizing Earthquake-Affected Business (“HIGASHI-NIHON DAI-SHINSAI JIGYOSHA SAISEI SHIEN KIKO”)]❍ Regarding the Corporation for Revitalizing Earthquake-Affected Business established in February 2012, we

implemented operations related to its establishment as the founder based on the laws and regulations.

❍ We cooperated in the business operations of the Enterprise Turnaround Initiative Corporation.

❍ As the founder of the Corporation for Revital-izing Earthquake-Affected Business, we appropriately implemented the operations related to its establishment.

❍ We will continue to cooperate in the appropri-ate and efficient implementation of the opera-tions of the Enterprise Turnaround Initiative Corporation and the Corporation for Revital-izing Earthquake-Affected Business.



9. Research and Study/International Cooperation Comprehensively Taking Account of the Financial and Economic Situations, etc.

(i) Research/study and proposals on matters related to the DICJ’s operations, and the provision of research results to parties concerned in various fields

❍ We focused our research and study activities on developments related to deposit insurance systems and resolution systems in the United States and Europe as well as trends of international discussions on financial regulations and supervision at G20 meetings and Financial Stability Board (FSB).

❍ We widely provided part of the results of these research and study activities through the publication of the Deposit Insurance Review, our research and study journal (the 13rd issue was published in FY2011).

❍ We provided the necessary information to the parties concerned within and outside the DICJ.

❍ We will continue research and study activities in consideration of developments at home and abroad.

Planning & CoordinationDepartment:



110

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

I. DIC

J’sO

perationsIII. A

nnexII. O

verview

of the DIC

J’s A

ctivities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy



[Status of posting of major public notices]

Public notices on the start of procedures for extinction of

claims on bank deposit accounts

Public notices on the start of procedures for the payment of

damage-recovery benefits

Public notices on the comple-tion of procedures for the

payment of damage-recovery benefits

No. of public notices 24 No. of public notices 24 No. of public notices 24

No. of financial situations 484 No. of financial institutions 357 No. of financial institutions 300

No. of deposit accounts 31,801 No. of deposit accounts 16,243 Amount of deposits, etc. ¥1,494 million

Amount of deposits, etc. ¥3,034 million Amount of deposits, etc. ¥2,086 million Payments of benefits to victims ¥1,111 million

8. Cooperation and Collaboration with Affiliated Companies

(i) Appropriate execu-tion of the opera-tions of the disposal of “Jusen claims,” etc., review of the RCC’s role in view of the revision to the Deposit Insurance Act, and provision of necessary guidance and advice to the RCC’s collection of claims in the affected areas of the Great East Japan Earthquake

❍ Regarding the disposal of secondary losses of Jusen claims, we implemented the following schemes agreed among related parties concerned: • The burden of the secondary loss arising from the collection of Jusen claims totaling ¥1,401.7 billion was

equally shared by the government and the private sector in accordance with the initial policy.• The government burden was covered by relevant funds without invoking any new fiscal measures.• The private burden portion was covered by the profit from the management of the Financial Stabilization

Contribution Fund, equivalent amount of investment made in the RCC from the Financial Stabilization Contribution Fund, and the transfer of funds from the General Account of the DICJ.

❍ Regarding operations related to the bridge bank function, we concluded a bridge bank function agreement with the RCC in November 2011 and held management-level and working-level discussions with the RCC to improve and enhance the framwork.

❍ Regarding the purchase framework of specified difficult recovery claims, we held working-level discussions with the RCC to improve and enhance it.

❍ We provided guidance and advice so that the RCC would make appropriate responses to the postponement of repayments, extension of deadlines, etc., based on the offers from debtors located in the affected areas of the Great East Japan Earthquake.

❍ We attended a meeting of the Compliance Committee of the RCC and delivered appropriate opinions as a member. At meetings of the Liaison Conference on Operational Improvements, etc., we held hearings on the protection of customers and compliance, and provided guidance and advice that would contribute to the improvement of operations.

❍ We steadily implemented schemes toward the completion of the Jusen resolution.

❍ We proceeded with the improvement of the framework for the bridge bank operations and the purchase operations of specified difficult recovery claims.

❍ We provided necessary guidance and advice from the standpoint of ensuring the appropriate management of the RCC.

❍ Toward the close of the Jusen Account, we will appropriately implement procedures including the return of the Financial Stabilization Contribution Fund to contributors.

❍ We will continue to establish a more appropri-ate and efficient framework for bridge bank operations and purchase operations for speci-fied difficult recovery claims.

❍ We will continue to follow up on the status of customer protection and compliance of the RCC and provide necessary guidance and advice for its appropriate business operations.



Treasury Department: Financial Planning and Coordination Division




Osaka Operation Department: Administration, Policy Planning and Coordination Division

(ii) Cooperation in the appropriate and efficient implemen-tation of the operations of Enter-prise Turnaround Initiative Corpora-tion of Japan

[Enterprise Turnaround Initiative Corporation of Japan]❍ We appropriately exercised our voting rights by attending an ordinary general meeting of shareholders.

[Corporation for Revitalizing Earthquake-Affected Business (“HIGASHI-NIHON DAI-SHINSAI JIGYOSHA SAISEI SHIEN KIKO”)]❍ Regarding the Corporation for Revitalizing Earthquake-Affected Business established in February 2012, we

implemented operations related to its establishment as the founder based on the laws and regulations.

❍ We cooperated in the business operations of the Enterprise Turnaround Initiative Corporation.

❍ As the founder of the Corporation for Revital-izing Earthquake-Affected Business, we appropriately implemented the operations related to its establishment.

❍ We will continue to cooperate in the appropri-ate and efficient implementation of the opera-tions of the Enterprise Turnaround Initiative Corporation and the Corporation for Revital-izing Earthquake-Affected Business.




(i) Research/study and proposals on matters related to the DICJ’s operations, and the provision of research results to parties concerned in various fields

❍ We focused our research and study activities on developments related to deposit insurance systems and resolution systems in the United States and Europe as well as trends of international discussions on financial regulations and supervision at G20 meetings and Financial Stability Board (FSB).

❍ We widely provided part of the results of these research and study activities through the publication of the Deposit Insurance Review, our research and study journal (the 13rd issue was published in FY2011).

❍ We provided the necessary information to the parties concerned within and outside the DICJ.

❍ We will continue research and study activities in consideration of developments at home and abroad.


Office for Research and Intelligence III. A

nnex

111


ICJ’s

Operations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy



(ii) Cooperation and collaboration with overseas deposit insurance authori-ties, improvement of Japan’s deposit insurance system by grasping interna-tional trends, contribution to the establishment of an international cooperation system concerning deposit insurance system, provision of technical assistance to foreign countries, establishment of a cooperation framework within Asia, and personnel exchanges with foreign deposit insurance organiza-tions

❍ Following the global financial crisis, there was an increasing need for international cooperation in the area of deposit insurance as a part of financial safety net. The DICJ proactively took part in the International Association of Deposit Insurers (IADI) and strove to grasp international trends to use them as a reference in enhancing and strengthening Japan’s deposit insurance system. In addition, the DICJ proactively partici-pated in the peer review implemented by the FSB based on the “Core Principles for Effective Deposit Insurance Systems,” which are internation-ally agreed basic principles on the deposit insurance system, and the “Methodology for Compliance Assess-ment of the Core Principles.”

Participation in the International Association of Deposit Insurers(IADI)

• The DICJ participated in the Annual General Meeting of the IADI held in Warsaw, Poland.• In addition to the Annual General Meeting, the DICJ participated in six meetings, including

those of the Executive Council, etc. (the representative of the DICJ serves as the Vice Chair of the Finance and Planning Committee and the Chair of the Asia-Pacific Regional Committee).

• The DICJ sent its staff to the IADI Secretariat in Basel.

International conferences, etc., sponsored by the DICJ

• The DICJ held the “6th DICJ Round Table” with 24 representatives of deposit insurance institutions from 14 countries/jurisdictions around the world.

• The DICJ held meetings for briefing the DICJ’s activities, etc., and exchanging opinions targeting resident officers of foreign embassies and central banks based in Tokyo.

❍ The DICJ, in cooperation with other domestic organizations, has been concentrating on technical assistance to Asia and other regions that are important for Japan in its international economic and financial relations.

Technical assistance to other countries, etc.

• The DICJ provided technical assistance through acceptance of survey missions from Vietnamese and Taiwanese Deposit Insurance organizations, and delegations from East Asian countries, former Soviet Union countries, and China.

Personnel exchanges

• The DICJ sent staff to the Federal Deposit Insurance Corporation (FDIC) for about a year to study the failure resolution experiences of the U.S., etc.

• The DICJ sent staff to the Korea Deposit Insurance Corporation (KDIC) for about two weeks to study the failure resolution experiences of Korea, etc.

❍ The DICJ is taking part in the establishment of best practices concerning the deposit insurance system by taking on an important role at the IADI and proactively contributing to its activities. We assume this is conductive to the enhancement and strengthening of Japan’s deposit insurance system. In addition, the DICJ has deepened personnel and operation coopera-tive relations with foreign organizations thorough active participation in the IADI and made progress toward achieving the task.

❍ We assume that we are making a certain measure of contribution to financial stability in Asia as a whole by promoting the introduction and improvement of deposit insurance through technical assistance based on Japan’s experi-ence, including the holding of seminars and the short-term dispatching of expert staff. This technical assistance of the DICJ is highly rated by overseas organizations.

❍ We will continue to step up our activities in order to further enhance international coopera-tion and collaboration through further contribu-tion to the IADI and the proactive conveyance of Japan’s experiences.

❍ We will continue to further increase technical assistance, while exercising greater ingenuity in the selection of assistance recipients and themes, etc., and establish a framework of cooperation in Asia, etc.



10. Steady Promotion of the Strengthening and Efficiency of Finances and Disclosure of Information on Financial Conditions

(i) Strengthening of financial manage-ment and rational-ization of operations related to finance, appropriate formula-tion, execution and management of budget plans necessary for the resolution of financial institution failures, etc., and easy-to-understand disclosure of information on financial conditions

❍ We ensured the transparency of budget formulation policy by holding the budget formulation policy meeting to decide on the budget formulation policy.

❍ Based on the purpose of the “Review of the remuneration of executives and employees at special public corporations, etc.” (required by Director-General of the Supervisory Bureau of Financial Service Agency on March 14, 2012), we prepared a FY2012 authorization budget assuming the future implementation of the remuneration revision (including temporary special measures).

❍ We prepared a FY2012 authorization budget that gave consideration to the implementation of more sophis-ticated and reasonable failure resolution after scrutinizing cost reductions, settlement of unnecessary items, etc., and increasing the general administration expenses of part-time employees, etc., necessary for the resolution of financial institution failures.

❍ With the Jusen resolution and the establishment of the Corporation for Revitalizing Earthquake-Affected Business Account, we changed the FY2011 authorization budget of the Jusen Account, etc., and took appropriate budgetary measures.

❍ In accordance with asset management rules as the criteria for management of assets held by the DICJ (securities, claims, fixed assets and goods), we executed the budget more appropriately.

❍ As for the strengthening of DICJ’s financial management, the loss in the Jusen Account was eliminated by using surplus funds in the Financial Stabilization Contribution Fund in the Jusen Account to compensate for the secondary loss. Other accounts except for the Enterprise Turnaround Initiative Corporation Account and the Corporation for Revitalizing Earthquake-Affected Business Account saw an increase in earned surpluses (liability reserves for the General Account) and a decrease in retained losses.

[Increase/decrease in earned surpluses (liability reserves for the General Account)/retained losses in respective accounts] (Unit: ¥100 million; ( ) denotes loss)

General Crisis Management Jusen Financial

RevitalizationEarly

Strengthening

Financial Functions

Strengthening

Damage Recovery

Distribution


Corporation(¥10 thousand)

Corporation for Revitalizing

Earthquake-Affected

Business (¥10 thousand)

End- FY2010 1,373 2,464 (4,565) (2,878) 15,513 10 42 (680) —

End- FY2011 4,205 2,566 0.8 (2,737) 15,606 49 46 (1,097) (9)

Increase/ Decrease 2,831 101 4,566 140 92 39 3 (417) (9)

❍ We assume that we were able to prepare budgets necessary for the resolution of finan-cial institution failures in the FY2012 authori-zation budget.

❍ In compliance with the asset management rules, we were able to execute and manage the budgets strictly and appropriately.

❍ Looking at the DICJ’s financial condition as a whole, we were able to strengthen our finances, with earned surpluses, etc., increasing except for the Enterprise Turnaround Initiative Corporation Account and the Corporation for Revitalizing Earthquake-Affected Business Account, and retained losses decreasing.

❍ We will continue to make further efforts to strengthen our financial management and streamline operations related to our finances going forward and also strive for easy-to-understand disclosure of information on the DICJ’s financial conditions.

Treasury Department: Budget and Accounting Division I, Budget and Accounting Division II, Budget and Accounting Division III


112

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

I. DIC

J’sO

perationsIII. A

nnexII. O

verview

of the DIC

J’s A

ctivities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy



(ii) Cooperation and collaboration with overseas deposit insurance authori-ties, improvement of Japan’s deposit insurance system by grasping interna-tional trends, contribution to the establishment of an international cooperation system concerning deposit insurance system, provision of technical assistance to foreign countries, establishment of a cooperation framework within Asia, and personnel exchanges with foreign deposit insurance organiza-tions

❍ Following the global financial crisis, there was an increasing need for international cooperation in the area of deposit insurance as a part of financial safety net. The DICJ proactively took part in the International Association of Deposit Insurers (IADI) and strove to grasp international trends to use them as a reference in enhancing and strengthening Japan’s deposit insurance system. In addition, the DICJ proactively partici-pated in the peer review implemented by the FSB based on the “Core Principles for Effective Deposit Insurance Systems,” which are internation-ally agreed basic principles on the deposit insurance system, and the “Methodology for Compliance Assess-ment of the Core Principles.”

Participation in the International Association of Deposit Insurers(IADI)

• The DICJ participated in the Annual General Meeting of the IADI held in Warsaw, Poland.• In addition to the Annual General Meeting, the DICJ participated in six meetings, including

those of the Executive Council, etc. (the representative of the DICJ serves as the Vice Chair of the Finance and Planning Committee and the Chair of the Asia-Pacific Regional Committee).

• The DICJ sent its staff to the IADI Secretariat in Basel.

International conferences, etc., sponsored by the DICJ

• The DICJ held the “6th DICJ Round Table” with 24 representatives of deposit insurance institutions from 14 countries/jurisdictions around the world.

• The DICJ held meetings for briefing the DICJ’s activities, etc., and exchanging opinions targeting resident officers of foreign embassies and central banks based in Tokyo.

❍ The DICJ, in cooperation with other domestic organizations, has been concentrating on technical assistance to Asia and other regions that are important for Japan in its international economic and financial relations.

Technical assistance to other countries, etc.

• The DICJ provided technical assistance through acceptance of survey missions from Vietnamese and Taiwanese Deposit Insurance organizations, and delegations from East Asian countries, former Soviet Union countries, and China.

Personnel exchanges

• The DICJ sent staff to the Federal Deposit Insurance Corporation (FDIC) for about a year to study the failure resolution experiences of the U.S., etc.

• The DICJ sent staff to the Korea Deposit Insurance Corporation (KDIC) for about two weeks to study the failure resolution experiences of Korea, etc.

❍ The DICJ is taking part in the establishment of best practices concerning the deposit insurance system by taking on an important role at the IADI and proactively contributing to its activities. We assume this is conductive to the enhancement and strengthening of Japan’s deposit insurance system. In addition, the DICJ has deepened personnel and operation coopera-tive relations with foreign organizations thorough active participation in the IADI and made progress toward achieving the task.

❍ We assume that we are making a certain measure of contribution to financial stability in Asia as a whole by promoting the introduction and improvement of deposit insurance through technical assistance based on Japan’s experi-ence, including the holding of seminars and the short-term dispatching of expert staff. This technical assistance of the DICJ is highly rated by overseas organizations.

❍ We will continue to step up our activities in order to further enhance international coopera-tion and collaboration through further contribu-tion to the IADI and the proactive conveyance of Japan’s experiences.

❍ We will continue to further increase technical assistance, while exercising greater ingenuity in the selection of assistance recipients and themes, etc., and establish a framework of cooperation in Asia, etc.




(i) Strengthening of financial manage-ment and rational-ization of operations related to finance, appropriate formula-tion, execution and management of budget plans necessary for the resolution of financial institution failures, etc., and easy-to-understand disclosure of information on financial conditions

❍ We ensured the transparency of budget formulation policy by holding the budget formulation policy meeting to decide on the budget formulation policy.

❍ Based on the purpose of the “Review of the remuneration of executives and employees at special public corporations, etc.” (required by Director-General of the Supervisory Bureau of Financial Service Agency on March 14, 2012), we prepared a FY2012 authorization budget assuming the future implementation of the remuneration revision (including temporary special measures).

❍ We prepared a FY2012 authorization budget that gave consideration to the implementation of more sophis-ticated and reasonable failure resolution after scrutinizing cost reductions, settlement of unnecessary items, etc., and increasing the general administration expenses of part-time employees, etc., necessary for the resolution of financial institution failures.

❍ With the Jusen resolution and the establishment of the Corporation for Revitalizing Earthquake-Affected Business Account, we changed the FY2011 authorization budget of the Jusen Account, etc., and took appropriate budgetary measures.

❍ In accordance with asset management rules as the criteria for management of assets held by the DICJ (securities, claims, fixed assets and goods), we executed the budget more appropriately.

❍ As for the strengthening of DICJ’s financial management, the loss in the Jusen Account was eliminated by using surplus funds in the Financial Stabilization Contribution Fund in the Jusen Account to compensate for the secondary loss. Other accounts except for the Enterprise Turnaround Initiative Corporation Account and the Corporation for Revitalizing Earthquake-Affected Business Account saw an increase in earned surpluses (liability reserves for the General Account) and a decrease in retained losses.

[Increase/decrease in earned surpluses (liability reserves for the General Account)/retained losses in respective accounts] (Unit: ¥100 million; ( ) denotes loss)

General Crisis Management Jusen Financial

RevitalizationEarly

Strengthening

Financial Functions

Strengthening

Damage Recovery

Distribution


Corporation(¥10 thousand)

Corporation for Revitalizing

Earthquake-Affected

Business (¥10 thousand)

End- FY2010 1,373 2,464 (4,565) (2,878) 15,513 10 42 (680) —

End- FY2011 4,205 2,566 0.8 (2,737) 15,606 49 46 (1,097) (9)

Increase/ Decrease 2,831 101 4,566 140 92 39 3 (417) (9)

❍ We assume that we were able to prepare budgets necessary for the resolution of finan-cial institution failures in the FY2012 authori-zation budget.

❍ In compliance with the asset management rules, we were able to execute and manage the budgets strictly and appropriately.

❍ Looking at the DICJ’s financial condition as a whole, we were able to strengthen our finances, with earned surpluses, etc., increasing except for the Enterprise Turnaround Initiative Corporation Account and the Corporation for Revitalizing Earthquake-Affected Business Account, and retained losses decreasing.

❍ We will continue to make further efforts to strengthen our financial management and streamline operations related to our finances going forward and also strive for easy-to-understand disclosure of information on the DICJ’s financial conditions.

Treasury Department: Budget and Accounting Division I, Budget and Accounting Division II, Budget and Accounting Division III

III. Annex

113


ICJ’s

Operations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy



(ii) Decision of appro-priate deposit insur-ance premium rates to ensure an equilibrium in the DICJ’s finances (the General Account) in the long term

❍ In the light of the DICJ’s finances, the domestic and international conditions and the burden of the deposit insurance premiums on financial institutions, the DICJ decided that (1) the deposit insurance premium for FY2012 will be the amount calculated by multiplying the balance of eligible deposits, etc., for the previous fiscal year (the average daily balance for business days during the previous fiscal year) by 0.084%; and (2) if there is no financial institution failure (occurrence of an insurance contingency, an order for a financial administrator to manage the business and assets of the failed financial institution, or measures against financial crises [Article 102, paragraph 1, item 2 or 3 of the Deposit Insurance Act]) during FY2012, we will refund the equivalent of 0.014% without interest and without delay after the end of FY 2012, and if there is a failure, we will not refund.

[Trends of deposit insurance premium rates] (Unit: %)

1971 (launch of system)–

FY1982 –

FY1986 –

FY1996 –

FY2001

FY2002

FY2003 –

FY2005

FY2006 –

FY2008

FY2009

FY2010 –

FY2012 (Note 3)

Deposit insurance

premium rate (Note 1)

0.006 0.008 0.012 0.048

Specific deposits 0.048 0.094

Deposits for

payment and

settlement purposes

0.090 0.115 0.110 0.108 0.107 0.107 0.107(0.089)

Other deposits,

etc.0.048 0.080

General deposits,

etc.0.080 0.083 0.080 0.081 0.081 0.082 0.082

(0.068)

Effective rate (Note 2) 0.006 0.008 0.012 0.084 0.084

(0.07)

Notes: 1. Specific deposits are current deposits, ordinary deposits and specified deposits, and other deposits, etc., are deposits other than specific deposits, such as time deposits. Until FY2004, deposits for payment and settle-ment purposes were the same as specific deposits, and general deposits, etc., were the same as other depos-its, etc., (specified settlement obligations as specified in Article 69-2, paragraph 1 of the Deposit Insurance Act were included in FY2004). From FY2005 onward, deposits for payment and settlement purposes comprised deposits meeting three requirements—bearing no interest, payable on demand, and capable of providing payment and settlement services—and specified settlement obligations, while general deposits, etc., comprised deposits, etc., other than deposits for payment and settlement purposes, such as time deposits.

2. Including the rate (0.036%) of the special insurance premium (provided for in Article 19, paragraph 1 of the Supplementary Provisions of the Deposit Insurance Act), which was in place between FY1996 and FY2001. The rate for FY2002 is the weighted average of the rates for specific deposits and other deposits, etc., and the rate for the period from FY2003 onward is the weighted average of the rates for deposits for payment and settlement purposes and general deposits, etc.

3. For FY2012, the premium rate and effective rate in the parentheses will be applied if there is neither (i) insurance contingency (ii) order for a financial administrator to manage the business and assets of the failed financial institution, nor (iii) approval by the Prime Minister to take measures stipulated in Article 102, paragragh 1, item 2 or 3 of the Deposit Insurance Act during the fiscal year.

❍ We set the appropriate deposit insurance premium rates to ensure an equilibrium in the DICJ’s finances in the medium- and long-term.

❍ We will continue to promote consideration of medium- and long-term deposit insurance premium rates.


(iii) Efficient fund management with focus on safety and certainty, stable fund-raising conducive to the soundness and efficiency of the DICJ’s finances, and promotion of provision of easy-to-understand information on fund management and fund-raising

Amid the stability of market interest rates at low levels reflecting the Bank of Japan’s monetary easing policy, we conducted fund management and financing as follows:

❍ In fund management, we managed the Financial Stabilization Contribution Fund in the Jusen Account by paying heed to securing a balance between safety, profitability and liquidity. For reinvestment purposes in particular, in order to cash in smoothly and surely for the completion of management of the Fund, we mainly purchased highly liquid Treasury discount bills (TDB). As a result, we had an investment return of ¥1.1 billion and an average investment yield of 0.128% in FY2011. As for surplus funds arising in individ-ual Accounts, we strove to implement efficient fund management focusing on safety and certainty. Specifi-cally, we managed surplus funds by appropriately combining secured call loan transactions, outright purchases of government bonds, etc., while paying enough attention to the use of funds in each Account.

[Trends of investment return and investment yields in the Financial Stabilization Contribution Fund]

FY2009 FY2010 FY2011

Investment return ¥11.3 billion ¥3.6 billion ¥1.1 billion

Investment yield 1.242% 0.394% 0.128%

❍ In fund-raising activities, we issued DICJ bonds (¥200 billion) in the Financial Revitalization Account. In the Financial Functions Strengthening Account, in response to the Great East Japan Earthquake, We conducted borrowing from financial institutions with the aim of capital injection of the financial institutions affected by the Great East Japan Earthquake (total amount of borrowings: ¥176.5 billion). On the other hand, we completed the redemption of all bonds in the Early Strengthening Account and the Crisis Manage-ment Account and also completed the repayment of borrowings from financial institutions in the General Account. Therefore, the outstanding balance of funds raised by the DICJ on the basis of all Accounts was largely reduced (¥4,100 billion at the end of FY2010 ¥2,800 billion at the end of FY2011).

❍ In the area of fund management, we managed the Financial Stabilization Contribution Fund paying heed to ensuring a balance between safety, profitability and liquidity. In addition, we efficiently managed surplus funds in individual Accounts focusing on safety and certainty.

❍ In fund-raising activities, we raised funds in a stable and efficient manner mainly through borrowings by taking into account the use of funds, the outlook for cash flows, capital injection measures related to the Great East Japan Earthquake, etc.

❍ In view of prevailing financial market condi-tions, we will strive for efficient fund manage-ment by focusing on safety and liquidity.

❍ We will seek to raise funds in a stable manner conducive to the soundness and efficiency of our finances by accurately figuring out our funding needs.

Treasury Department: Finance Division I


114

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

I. DIC

J’sO

perationsIII. A

nnexII. O

verview

of the DIC

J’s A

ctivities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy



(ii) Decision of appro-priate deposit insur-ance premium rates to ensure an equilibrium in the DICJ’s finances (the General Account) in the long term

❍ In the light of the DICJ’s finances, the domestic and international conditions and the burden of the deposit insurance premiums on financial institutions, the DICJ decided that (1) the deposit insurance premium for FY2012 will be the amount calculated by multiplying the balance of eligible deposits, etc., for the previous fiscal year (the average daily balance for business days during the previous fiscal year) by 0.084%; and (2) if there is no financial institution failure (occurrence of an insurance contingency, an order for a financial administrator to manage the business and assets of the failed financial institution, or measures against financial crises [Article 102, paragraph 1, item 2 or 3 of the Deposit Insurance Act]) during FY2012, we will refund the equivalent of 0.014% without interest and without delay after the end of FY 2012, and if there is a failure, we will not refund.

[Trends of deposit insurance premium rates] (Unit: %)

1971 (launch of system)–

FY1982 –

FY1986 –

FY1996 –

FY2001

FY2002

FY2003 –

FY2005

FY2006 –

FY2008

FY2009

FY2010 –

FY2012 (Note 3)

Deposit insurance

premium rate (Note 1)

0.006 0.008 0.012 0.048

Specific deposits 0.048 0.094

Deposits for

payment and

settlement purposes

0.090 0.115 0.110 0.108 0.107 0.107 0.107(0.089)

Other deposits,

etc.0.048 0.080

General deposits,

etc.0.080 0.083 0.080 0.081 0.081 0.082 0.082

(0.068)

Effective rate (Note 2) 0.006 0.008 0.012 0.084 0.084

(0.07)

Notes: 1. Specific deposits are current deposits, ordinary deposits and specified deposits, and other deposits, etc., are deposits other than specific deposits, such as time deposits. Until FY2004, deposits for payment and settle-ment purposes were the same as specific deposits, and general deposits, etc., were the same as other depos-its, etc., (specified settlement obligations as specified in Article 69-2, paragraph 1 of the Deposit Insurance Act were included in FY2004). From FY2005 onward, deposits for payment and settlement purposes comprised deposits meeting three requirements—bearing no interest, payable on demand, and capable of providing payment and settlement services—and specified settlement obligations, while general deposits, etc., comprised deposits, etc., other than deposits for payment and settlement purposes, such as time deposits.

2. Including the rate (0.036%) of the special insurance premium (provided for in Article 19, paragraph 1 of the Supplementary Provisions of the Deposit Insurance Act), which was in place between FY1996 and FY2001. The rate for FY2002 is the weighted average of the rates for specific deposits and other deposits, etc., and the rate for the period from FY2003 onward is the weighted average of the rates for deposits for payment and settlement purposes and general deposits, etc.

3. For FY2012, the premium rate and effective rate in the parentheses will be applied if there is neither (i) insurance contingency (ii) order for a financial administrator to manage the business and assets of the failed financial institution, nor (iii) approval by the Prime Minister to take measures stipulated in Article 102, paragragh 1, item 2 or 3 of the Deposit Insurance Act during the fiscal year.

❍ We set the appropriate deposit insurance premium rates to ensure an equilibrium in the DICJ’s finances in the medium- and long-term.

❍ We will continue to promote consideration of medium- and long-term deposit insurance premium rates.


(iii) Efficient fund management with focus on safety and certainty, stable fund-raising conducive to the soundness and efficiency of the DICJ’s finances, and promotion of provision of easy-to-understand information on fund management and fund-raising

Amid the stability of market interest rates at low levels reflecting the Bank of Japan’s monetary easing policy, we conducted fund management and financing as follows:

❍ In fund management, we managed the Financial Stabilization Contribution Fund in the Jusen Account by paying heed to securing a balance between safety, profitability and liquidity. For reinvestment purposes in particular, in order to cash in smoothly and surely for the completion of management of the Fund, we mainly purchased highly liquid Treasury discount bills (TDB). As a result, we had an investment return of ¥1.1 billion and an average investment yield of 0.128% in FY2011. As for surplus funds arising in individ-ual Accounts, we strove to implement efficient fund management focusing on safety and certainty. Specifi-cally, we managed surplus funds by appropriately combining secured call loan transactions, outright purchases of government bonds, etc., while paying enough attention to the use of funds in each Account.

[Trends of investment return and investment yields in the Financial Stabilization Contribution Fund]

FY2009 FY2010 FY2011

Investment return ¥11.3 billion ¥3.6 billion ¥1.1 billion

Investment yield 1.242% 0.394% 0.128%

❍ In fund-raising activities, we issued DICJ bonds (¥200 billion) in the Financial Revitalization Account. In the Financial Functions Strengthening Account, in response to the Great East Japan Earthquake, We conducted borrowing from financial institutions with the aim of capital injection of the financial institutions affected by the Great East Japan Earthquake (total amount of borrowings: ¥176.5 billion). On the other hand, we completed the redemption of all bonds in the Early Strengthening Account and the Crisis Manage-ment Account and also completed the repayment of borrowings from financial institutions in the General Account. Therefore, the outstanding balance of funds raised by the DICJ on the basis of all Accounts was largely reduced (¥4,100 billion at the end of FY2010 ¥2,800 billion at the end of FY2011).

❍ In the area of fund management, we managed the Financial Stabilization Contribution Fund paying heed to ensuring a balance between safety, profitability and liquidity. In addition, we efficiently managed surplus funds in individual Accounts focusing on safety and certainty.

❍ In fund-raising activities, we raised funds in a stable and efficient manner mainly through borrowings by taking into account the use of funds, the outlook for cash flows, capital injection measures related to the Great East Japan Earthquake, etc.

❍ In view of prevailing financial market condi-tions, we will strive for efficient fund manage-ment by focusing on safety and liquidity.

❍ We will seek to raise funds in a stable manner conducive to the soundness and efficiency of our finances by accurately figuring out our funding needs.


III. Annex

115


ICJ’s

Operations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy



[Trends of the outstanding balance of funds raised]

FY2009 FY2010 FY2011

Balance of funding ¥5,484.9 billion ¥4,092.3 billion ¥2,838.0 billion

Balance of bonds (annual issuance) ¥3,950.0 billion (¥1,050.0 billion) ¥3,630.0 billion (¥780.0 billion) ¥1,930.0 billion (200.0 billion)

Ratio of bonds 72.0% 88.7% 68.0%

❍ Regarding the promotion of the provision of information, we held explanatory meetings with financial institutions that participate in fund-borrowing auctions to provide them with information on the DICJ’s fund-raising environment and fund-raising plan, etc., to ensure more smooth fund-raising, and also strove to provide easy-to-understand information through such steps as new disclosure of the “Fund-raising costs as the preferred dividend annual rate” of the financial institutions that require capital injection as special exception under the impact of the Great East Japan Earthquake through the DICJ website.

❍ We also promoted the provision of easy-to-understand information on fund management and fund-raising by holding explanatory meetings of fund-borrowing auctions, proac-tively using the DICJ website, etc.

❍ We will promote the provision of easy-to-understand information on our fund manage-ment and fund-raising activities.


11. Enhancement of Preparedness for Securing Compliance, etc.

Enhancement of preparedness for compliance and opera-tional risk management, in particular appropriate information security measures

[Ensuring compliance]❍ In the first half of FY2011, while we continued proceeding with the resolution of the failure of the Incubator

Bank from the previous year, we conducted activities to secure compliance focusing on the maintenance and continuation of education and reporting systems already in place. In the second half when the resolution of the failure reached a certain point, we concentrated on education activities for executives and employees in order to further solidify our preparedness for compliance.

(1) First half of FY2011i) At the beginning of the new fiscal year, the Governor of the DICJ sent a message related to the

securing of compliance to all executives and employees.ii) We enhanced the system of consultation with a corporate lawyer (established a system that enabled

staff to feel free to consult with a corporate lawyer through visit, e-mail, etc.)iii) We enhanced cooperation between the financial administrator panel stationed in the Incubator Bank

and Legal Affairs Department.iv) We added problematic examples to a collection of examples, which was delivered at a liaison

meeting for people responsible for compliance held in September 2011.(2) Second half of FY2011

i) We implemented lecture meetings on compliance (external instructors). a. Compliance examples in the food service business were introduced to all executives and

employees (November 2011) b. Lecture on the DICJ’s compliance was held targeting senior employees (March 2012)ii) We reviewed departmental training (training under unified themes was conducted in each department) a. Exchanges of opinions concerning tasks were conducted in order to raise general employees’

awareness of problems (December 2011) b. A corporate lawyer made comments based on the results of the exchanges of opinions

(February 2012) c. The comments were returned to each department (March 2012)

[Operational risk management, etc.]❍ We strove to increase the awareness of information security at seminars and various meetings as part of

information management and information security measures, and reviewed rules related to information security and enhanced them.

[Ensuring compliance]❍ We assume that our various efforts described

in the left column have contributed to enhanc-ing awareness of compliance among execu-tives and employees.

[Operational risk management, etc.]❍ We increased the awareness of the importance

of information management, etc.

[Ensuring compliance]❍ In order to further ensure the understanding

and proper action concerning compliance by DICJ executives and employees, we will maintain and continue the current education and reporting systems, reassess the current compliance system as a whole and review it as need arises to make changes, enhancements, etc., of it.

[Operational risk management, etc.]❍ We will continue to strive to enhance the

awareness of information security by keeping executives and employees informed about relevant rules.




12. Appropriate and Efficient Management of Organization, etc.

Appropriate and efficient management of organization, person-nel and systems in accordance with the operational policy

[Organization and personnel]❍ In accordance with the government’s rationalization policy on authorized strength of personnel, we formu-

lated a rationalization plan and reduced the authorized strength of personnel by eight.

❍ In response to new business operations associated with the resolution of the failure of the Incubator Bank and the revision of the Deposit Insurance Act (May 2011), we implemented expeditious and flexible person-nel allocation.

❍ We established a task force to enhance the integrated management of human resources in preparation for the review of the organization and business operations and the resolution of financial institution failures for the time being, and reflected it in DICJ’s request for new structures and authorized strength of personnel in FY2012.

[Systems]❍ In order to increase executives’ involvement in the promotion of information system improvement, the

Deputy Governor was newly assigned as the CIO, rather than the Planning and Coordination Department Head, who had previously held the position, and also newly established the position of Deputy CIO to assist the CIO. We established a support organization within the Information System Office to provide personnel and technical assistance related to information systems.

[Organization and personnel]❍ We appropriately dealt with the processing of

various operations based on the operational policy under the constraints of limited manpower.

[Systems]❍ We enhanced business oprations to oversee the

systems across the whole organization.

❍ We will continue to strive to conduct appropri-ate and efficient management of organization, personnel and systems in accordance with the operational policy and in response to the environmental changes.


Personnel Division, Planning & Coordination Division

a


116

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

I. DIC

J’sO

perationsIII. A

nnexII. O

verview

of the DIC

J’s A

ctivities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy



[Trends of the outstanding balance of funds raised]

FY2009 FY2010 FY2011

Balance of funding ¥5,484.9 billion ¥4,092.3 billion ¥2,838.0 billion

Balance of bonds (annual issuance) ¥3,950.0 billion (¥1,050.0 billion) ¥3,630.0 billion (¥780.0 billion) ¥1,930.0 billion (200.0 billion)

Ratio of bonds 72.0% 88.7% 68.0%

❍ Regarding the promotion of the provision of information, we held explanatory meetings with financial institutions that participate in fund-borrowing auctions to provide them with information on the DICJ’s fund-raising environment and fund-raising plan, etc., to ensure more smooth fund-raising, and also strove to provide easy-to-understand information through such steps as new disclosure of the “Fund-raising costs as the preferred dividend annual rate” of the financial institutions that require capital injection as special exception under the impact of the Great East Japan Earthquake through the DICJ website.

❍ We also promoted the provision of easy-to-understand information on fund management and fund-raising by holding explanatory meetings of fund-borrowing auctions, proac-tively using the DICJ website, etc.

❍ We will promote the provision of easy-to-understand information on our fund manage-ment and fund-raising activities.


11. Enhancement of Preparedness for Securing Compliance, etc.

Enhancement of preparedness for compliance and opera-tional risk management, in particular appropriate information security measures

[Ensuring compliance]❍ In the first half of FY2011, while we continued proceeding with the resolution of the failure of the Incubator

Bank from the previous year, we conducted activities to secure compliance focusing on the maintenance and continuation of education and reporting systems already in place. In the second half when the resolution of the failure reached a certain point, we concentrated on education activities for executives and employees in order to further solidify our preparedness for compliance.

(1) First half of FY2011i) At the beginning of the new fiscal year, the Governor of the DICJ sent a message related to the

securing of compliance to all executives and employees.ii) We enhanced the system of consultation with a corporate lawyer (established a system that enabled

staff to feel free to consult with a corporate lawyer through visit, e-mail, etc.)iii) We enhanced cooperation between the financial administrator panel stationed in the Incubator Bank

and Legal Affairs Department.iv) We added problematic examples to a collection of examples, which was delivered at a liaison

meeting for people responsible for compliance held in September 2011.(2) Second half of FY2011

i) We implemented lecture meetings on compliance (external instructors). a. Compliance examples in the food service business were introduced to all executives and

employees (November 2011) b. Lecture on the DICJ’s compliance was held targeting senior employees (March 2012)ii) We reviewed departmental training (training under unified themes was conducted in each department) a. Exchanges of opinions concerning tasks were conducted in order to raise general employees’

awareness of problems (December 2011) b. A corporate lawyer made comments based on the results of the exchanges of opinions

(February 2012) c. The comments were returned to each department (March 2012)

[Operational risk management, etc.]❍ We strove to increase the awareness of information security at seminars and various meetings as part of

information management and information security measures, and reviewed rules related to information security and enhanced them.

[Ensuring compliance]❍ We assume that our various efforts described

in the left column have contributed to enhanc-ing awareness of compliance among execu-tives and employees.

[Operational risk management, etc.]❍ We increased the awareness of the importance

of information management, etc.

[Ensuring compliance]❍ In order to further ensure the understanding

and proper action concerning compliance by DICJ executives and employees, we will maintain and continue the current education and reporting systems, reassess the current compliance system as a whole and review it as need arises to make changes, enhancements, etc., of it.

[Operational risk management, etc.]❍ We will continue to strive to enhance the

awareness of information security by keeping executives and employees informed about relevant rules.




12. Appropriate and Efficient Management of Organization, etc.

Appropriate and efficient management of organization, person-nel and systems in accordance with the operational policy

[Organization and personnel]❍ In accordance with the government’s rationalization policy on authorized strength of personnel, we formu-

lated a rationalization plan and reduced the authorized strength of personnel by eight.

❍ In response to new business operations associated with the resolution of the failure of the Incubator Bank and the revision of the Deposit Insurance Act (May 2011), we implemented expeditious and flexible person-nel allocation.

❍ We established a task force to enhance the integrated management of human resources in preparation for the review of the organization and business operations and the resolution of financial institution failures for the time being, and reflected it in DICJ’s request for new structures and authorized strength of personnel in FY2012.

[Systems]❍ In order to increase executives’ involvement in the promotion of information system improvement, the

Deputy Governor was newly assigned as the CIO, rather than the Planning and Coordination Department Head, who had previously held the position, and also newly established the position of Deputy CIO to assist the CIO. We established a support organization within the Information System Office to provide personnel and technical assistance related to information systems.

[Organization and personnel]❍ We appropriately dealt with the processing of

various operations based on the operational policy under the constraints of limited manpower.

[Systems]❍ We enhanced business oprations to oversee the

systems across the whole organization.

❍ We will continue to strive to conduct appropri-ate and efficient management of organization, personnel and systems in accordance with the operational policy and in response to the environmental changes.


Personnel Division, Planning & Coordination Division

a

III. Annex

117


ICJ’s

Operations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

March 30, 2012

Deposit Insurance Corporation of Japan Operational Policy for FY2012 (April 2012 – March 2013)

1. Improvement and Enhancement of the Failure Resolution Framework of Financial Institutions Corresponding to Every Situation from the Perspective of the Protection of Depositors.

(i) The Deposit Insurance Corporation of Japan (“DICJ”) will endeavor to bolster its structure to further enhance its failure resolution schemes and financial administrator operations. In addition to pursuing greater collaboration with relevant persons both inside and outside its organization, the DICJ will upgrade in-service training/practice and briefings, secure the personnel needed to fulfill its role as financial admin-istrator and improve their know-how and skills, and otherwise manage and analyze needed information. Given that the enactment of the revised Deposit Insurance Act will require greater than ordinary structural adjustments by financial institutions, the DICJ will provide financial institutions with necessary advice and endeavor to follow up on the efforts undertaken by these financial institutions.

With the DICJ having introduced systems for use in depositor’s name–based aggregation and in carrying out operations as a financial administrator and with revisions having been made to the Deposit Insurance Act, the DICJ will work in close cooperation and collaboration with financial institutions in handling instances of failure so as to enable, for instance, a financial institution that fails on a Friday to smoothly and dependably reopen for business on the following Monday if the DICJ is selected as the financial administrator.

(ii) The DICJ will comprehensively analyze and oversee preparedness (Note 1) for smooth repayment of insured deposits. Depending on the degree of preparedness, the DICJ will organically combine such measures as audits of financial institutions, hearings on improvements made with respect to points noted in these audits (“improvement hearings”), system verification (Note 2) and training/advice, and implement these measures efficiently and effectively so as to enable seamless continuity of business during times of failure. The DICJ will pursue adequate exchanges of opinions with financial institutions during these audits and improvement hearings.

The DICJ will inform the financial institutions being audited of their ordinary level of preparedness for aggregating depositor account data and, by doing so, encourage these financial institutions to ensure suitable maintenance/control of their name-based aggregation databases and systems.Notes: 1. Preparedness for smooth repayment of insured deposits refers to the ready availability of databases for name-based aggre-

gation of deposits, the segregated management of insured and non-insured deposits, the readiness of systems for preparing data on changes in deposits (deposit/withdrawal statement files), etc., and the preparations in place (the availability of procedural guidelines, manuals, etc.) for offsets or purchases (estimated proceeds payments) of deposits and other claims.

2. System verification entails requesting that a financial institution submit depositor data and then verifying via the DICJ system whether depositor’s name-based aggregation databases have been properly prepared.

(iii) To achieve more speedy name-based aggregation of deposits and to facilitate smoother financial adminis-trator operations, the DICJ will utilize the lessons learned from its experiences in failure resolutions in FY2010 to continue upgrading/expanding its operational processing framework and further improving its practical capabilities. The DICJ will also enhance the failure resolution systems used for name-based aggregation of deposits and for financial administrator operations, by establishing the operational systems throughout the DICJ, continuing efficient improvements of the systems, and conducting various types of training.

(iv) The DICJ will examine necessary aspects of the schemes and practices utilized in failure resolution from the perspective of ensuring that the deposit insurance system runs smoothly, will pursue close cooperation with the relevant authorities, and will collaborate with other safety-net participants.

(Reference) FY2012 Operational PolicyThe DICJ reviewed its operational policy from the previous fiscal year in light of the changes that had occurred in the environment surrounding the deposit insurance system, and prepared and announced on March 30, 2012 its operational policy for FY2012.


118

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

I. DIC

J’sO

perationsIII. A

nnexII. O

verview

of the DIC

J’s A

ctivities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

2. Public Relations Activities Related to the Deposit Insurance System and the DICJ’s Operations The DICJ will strive to utilize a variety of media in efforts to provide depositors with easily comprehensible information to deepen their understanding of the deposit insurance system and the DICJ’s roles and operations.

3. Operations Related to Capital Injection(i) The DICJ will work closely with applicant financial institutions and the relevant authorities in its opera-

tions related to capital injection under the Financial Functions Strengthening Act (the application deadline: March 31, 2017), including special measures concerning the Great East Japan Earthquake under the revised Financial Functions Strengthening Act.

(ii) Regarding preferred shares and other capital-raising instruments subscribed under the Early Strengthening Act and the Financial Functions Strengthening Act and other Acts, the DICJ will continue to work toward the appropriate management and strive for their smooth disposal based on “Temporary Guideline for Disposal of Preferred Shares and other Capital-Raising Instruments Acquired through Capital Injection” (published in October 2005).

4. Provision of suitable support to contracted bank in their resolution and collection operations, to include taking strict measures against malicious interference with recovery efforts, pursuing liability, and suitably purchasing and collecting specified difficult recovery claims(i) When efforts get underway to purchase and collection specified difficult recovery claims, the DICJ will

collaborate more closely with the RCC and actively provide guidance and advice to support efforts by its contracted bank the RCC to properly recover claims from malicious debtors and, above all, to take strict measures against interference by antisocial forces with recovery efforts.

(ii) To assist the RCC’s collection operation, the DICJ will carefully select cases for investigation and conduct in-depth asset investigations of specified difficult recovery claims with an emphasis on malicious debtors, including those affiliated with antisocial forces.

(iii) The DICJ will strive to conduct thorough investigations into failed financial institutions to clarify develop-ments, etc., that led to failures and appropriately execute operations to pursue criminal and civil liabilities.

(iv) The DICJ will carry out the newly-created purchase and collection operations for specified difficult recov-ery claims with the cooperation of private-sector financial institutions and other relevant parties. The DICJ will also follow proper procedures with respect to determining the eligibility of claims as specified difficult recovery claims and the purchase price of claims being considered for purchase, to include paying heed to the opinions of the Purchase Screening Committee in these areas.

5. Appropriate Management and Disposal, etc., of Retained Asset The DICJ will properly and efficiently manage/dispose of claims, shares, etc., obtained from failed financial institutions, seeking to protect customers and minimize the impacts on markets and bearing in mind the target resolution period.

6. Appropriate Execution of Operations Related to the Incubator Bank The DICJ will endeavor to provide tenders to rehabilitation creditors, including uninsured depositors, as set forth in the Incubator Bank’s rehabilitation plan, make final settlement payments to depositors who have received estimated proceeds payments, and to duly conclude management of the Incubator Bank with the cooperation of relevant institutions. The DICJ will also make suitable changes in the amounts of its monetary grants to the Incubator Bank.

7. Appropriate Implementation of Public Notice Operations, etc., Related to Procedures for Criminal Accounts Damages Recovery The DICJ will maintain its publicity efforts to help secure relief for victims of bank transfer fraud. It will work to ensure a seamless continuation of publicity efforts following system updates scheduled to begin in April 2012, and will properly oversee the progress being made by contracted companies in the upgrading of applica-tion programs expected to last through December 2012. The DICJ will continue to handle the payments to the DICJ in line with the findings of “The Project Team on Issues Surrounding Payments to Depositis Insurance Corporation Stipulated in the Criminal Accounts Damage Recovery Act” of the Financial Services Agency.

III. Annex

119


ICJ’s

Operations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

8. Cooperation and Collaboration with Affiliated Companies(i) Resolution and Collection Corporation (RCC) The DICJ will seek collaboration/cooperation from the RCC in duly closing the Jusen Account and

performing other operations. The DICJ will also provide the RCC with guidance/advice to enable it to properly carry out its new assignments of purchase and collection of specified difficult recovery claims and bridge bank operations. Furthermore, the DICJ will provide guidance and advice necessary for the RCC to appropriately deal with the collection of the claims it holds, accurately grasping the conditions of its debtors in areas damaged by the Great East Japan Earthquake.

(ii) Enterprise Turnaround Initiative Corporation of Japan (ETIC); Corporation for Revitalizing Earthquake-Affected Business

The DICJ will offer its cooperation to ensure proper and efficient operations at the ETIC and the Corpora-tion for Revitalizing Earthquake-Affected Business.

9. Research and Study/International Cooperation Comprehensively Taking Account of the Financial and Economic Situations, etc.Given the status of crisis management, etc., in response to the latest global financial crisis in various countries and areas in the world, the DICJ will take the following steps:(i) Regarding matters related to the DICJ’s operation such as the deposit insurance system, etc., the DICJ

will conduct research and study activities both at home and abroad and provide the information to parties concerned in various quarters.

(ii) The DICJ will pursue greater collaboration and cooperation with overseas deposit insurance authorities, hosting international conferences and taking an active role in the activities of the International Associa-tion of Deposit Insurers. These activities will enable the DICJ to ascertain international trends relevant to deposit insurance systems and finance and to enhance Japan’s own deposit insurance system. Further-more, the DICJ will continue to contribute to the establishment of an international cooperation system concerning the deposit insurance system and provide technical assistance to other countries, and in partic-ular seek to establish a cooperative framework in Asia. In order to further enhance the relationships with deposit insurance organizations of other countries, the DICJ will carry out personnel exchanges with these organizations.

10. Steady Promotion of the Strengthening and Efficiency of Finances and Disclosure of Information on Financial Conditions(i) The DICJ will seek to improve its financial soundness and rationalize its financial operations, even as it

prepares and implements/administers budgets capable of dealing with the failure resolution at financial institutions and the revisions made in the Deposit Insurance Act. The DICJ will also strive for easy-to-understand disclosure of information on its financial conditions.

(ii) Taking its financial conditions into account, the DICJ will set appropriate deposit insurance premium rates to ensure an equilibrium in the DICJ’s finances (the General Account) in the long term.

(iii) The DICJ will keep an eye on the financial landscape as it continues its pursuit of efficient fund manage-ment emphasizing safety and liquidity and, based on an accurate assessment of the demand for funds, will seek to secure reliable financing to reinforce its financial soundness and improve its efficiency. The DICJ will also provide easily comprehensible information on its fund management.

11. Enhancement of Readiness for Compliance, etc. The DICJ will further enhance its readiness for the compliance and management of operational risk, etc. In particular, the DICJ will take every possible measure for information security, including the protection of personal information. In order to make its executives and employees thoroughly aware of these matters, the DICJ will hold relevant training sessions in various forms at least twice a year.

12. Appropriate and Efficient Management of Organizational Systems, etc. The DICJ will remain committed to deliberatelly and efficiently administering its organizations, personnel and systems in keeping with the above operational policy and changes in its environment.


120

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

I. DIC

J’sO

perationsIII. A

nnexII. O

verview

of the DIC

J’s A

ctivities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

(Reference) Major Events during FY2011

2011 Apr.25 Financial assistance for failure resolution at the Incubator Bank provided via (1) monetary grants to the 2nd BBJ, (2) monetary grants to the Incubator Bank, and (3) purchase of assets from the Incuba-tor Bank (purchasing consigned to the RCC) The Incubator Bank transfers its business to the 2nd BBJ

Jul.27 The Act for partial revision of the Act on Special Measures for Strengthening Financial Functions and the Act on Special Measures for Promotion of Organizational Restructuring of Financial Institu-tions enacted to reinforce the operating foundations of financial institutions in the wake of the Great East Japan Earthquake Submit the Incubator Bank’s rehabilitation plan to the Tokyo District Court

Aug. 23 Lawsuit filed by the RCC to establish liability of the Incubator Bank’s former executives

Sept. 9 End date for management of the Incubator Bank extended until September 10, 2012 (authorized by the FSA Commissioner)

Sept.30 AEON Bank selected as the acquiring financial institution for the Incubator BankThe Sendai Bank and the Tsukuba Bank provided with capital injections by the DICJ through subscription of preferred shares in accordance with the Financial Functions Strengthening Act

Oct.28 Guideline for Purchase of Specified Difficult Recovery Claims published

Oct.29 The Act for Partial Revision of the Deposit Insurance Act goes into effect (provisions on measures for prompt and smooth repayment of deposits upon failure to go into effect on May 19, 2012)

Nov. 15 The Incubator Bank’s rehabilitation plan approved and confirmed

Dec. 26 All outstanding shares of the 2nd BBJ transferred to AEON Bank, selected as the acquiring financial institution for the Incubator Bank

Dec.28 The 77 Bank provided with capital injection by the DICJ through subordinated loans in accordance with the Financial Functions Strengthening Act

2012 Jan. 18 The Shinkumi Federation Bank (the Soso Shinkumi Bank, the Iwaki Shinkumi, Ltd.) provided with capital injections by the DICJ through the purchase of trust beneficiary rights in accordance with the Financial Functions Strengthening Act

Feb.17 Capital increase (Turnaround Initiative for Business Operators in the Area of the Great East Japan Earthquake Account: 18.68 billion yen)

Feb.20 The Shinkin Central Bank (the Miyako Shinkin Bank, the Kesennuma Shinkin Bank, the Ishinomaki Shinkin Bank, the Abukuma Shinkin Bank) provided with capital injections by the DICJ through the purchase of trust beneficiary rights in accordance with the Financial Functions Strengthening Act

Feb.22 Corporation for Revitalizing Earthquake-Affected Business established

Mar. 7 The DICJ held the 6th DICJ Round Table (two days: March 7-8, 2012)

Mar.26 Deposit insurance premium rates from FY2012 set at 0.082% for general deposits, etc. and 0.107% for deposits for payment and settlement purposes; If there is neither (i) insurance contingency (ii) order for a financial administrator to manage the business and properties of the failed financial institution, nor (iii) decision by the Prime Minister to take measures stipulated in Article 102, paragraph 1, item 2 or 3 of Deposit Insurance Act during the fiscal year, deposit insurance premium rates applicable in FY2012 set at 0.068% for general depos-its, etc. and 0.089% for deposits for payment and settlement purposes (approved by the FSA Commissioner and Minister of Finance on March 30, 2012)

Mar.30 The Shinkumi Federation Bank (the Nasu Shinkumi Bank) provided with capital injection by the DICJ through the purchase of trust beneficiary rights in accordance with the Financial Functions Strengthening Act

III. Annex

121


ICJ’s

Operations

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy


122

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

I. DIC

J’sO

perationsIII. A

nnexII. O

verview

of the DIC

J’s A

ctivities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

1. I. DICJ’s Operations

(1) Historical Development of the Deposit Insurance System (As of March 31, 2012)(2) Historical Development of Special Measures for the Contracted Bank, the Specified Contracted Bank and the

Claim Resolution Company (As of March 31, 2012)

2. II. Overview of the DICJ’s Activities in FY2011

(1) List of Capital Injection Operations (for each Act)(2) Capital Injection Scheme(3) Overview of Settlement of Accounts in FY2011(4) Balance Sheets, and Profit and Loss Statements (5) Income and Expenditures on a Fiscal Year Basis (General Account) (6) Trends in the Eligible Deposits and Liability Reserves(7) Trends in the Eligible Deposits by Sector of Financial Institutions(8) Trends in the Number of Insured Financial Institutions

III. Annex

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

123

III. AnnexIII. A

nnexI. D

ICJ’s

Operations

Notes: 1. Sogo banks (mutual financing banks) have gradually transformed into ordinary banks since February 1989 (Mutual Financing Bank Act abolished on April 1, 1993).

2. During the period from FY1996 to FY2001, a special premium (the insurance premium rate 0.036%) was set.

3. A system introduced with response to the Special Corporate Reorganization Act.

4. Purchase of assets from banks under special public management, financial institutions under management, contracted bridge banks and sound financial institutions, which was a temporary measure valid until the end of March 2001. Purchase of assets from sound financial institutions was a measure valid until the end of March 2005.

5. Current deposits, ordinary deposits and specified deposits were fully covered until the end of FY2002. (As these types of deposits were regarded as deposits for payment and settlement purposes, they were insured under the blanket guarantee until the end of FY2004).

6. For FY2012, the premium rates in the parentheses will be applied if there is neither (i) insurance contingency, (ii) order for a financial administrator to manage the business and properties of the failed financial institution, nor (iii) decision by the Prime Minister to take measures stipulated in Article 102, paragraph 1, item 2 or 3 of the Deposit Insurance Act during the fiscal year.

Principal Special Operations Introduced in the Jun. 1996 Amendment of the Deposit Insurance Act

• Special financial assistance• Special purchase of deposits and other claims• Collection of special insurance premiums• Capital contribution, loss compensation, debt guarantee, guidance, advice,

etc. for the contracted bank• Asset investigation of debtors concerning loan assets transferred to the

contracted bank and loan collection• Entrusting purchase of assets of failed credit cooperatives to the contracted

bank• Government debt guarantees for borrowings from the BOJ, or other finan-

cial institutions, etc. to implement special operations concerning failed credit cooperatives

Main Points in the Amendment of the Deposit Insurance Act of Dec. 1997

• Addition of consolidation to the types of merger, etc., for which an appli-cation for financial assistance can be made

• Financial assistance for specified mergers (temporary measure)

Main Points in the Amendment of the Deposit Insurance Act of Feb. 1998

• Integration of the Special Account for general financial institutions and the Special Account for credit cooperatives into the Special Operations Account

• Expansion of the RCB’s function to act as an assuming bank for general financial institutions

• Issuance of DICJ bonds• Extension of penal investigating power to include the recovery of loan

assets of failed financial institutions• Introduction of the Special Operations Fund (up to a limit of ¥7 trillion

worth of government-granted bonds)

Main Points in the Financial Revitalization Related Act and Early Strengthening Act enacted in Oct. 1998

• Addition of financial administrator operations• Addition of operations related to: establishment and business management

of bridge bank, special public management, and equity capital injection of financial institutions, etc.

• Expansion of the scope of where the DICJ can purchase assets from, including special public management banks, bridge banks and financial institutions, etc.

• Establishment of the Financial Reconstruction Account and the Early Strengthening Account

1. I. DICJ’s Operations(1) Historical Development of the Deposit Insurance System (As of March 31, 2012)

Initial Provisions in 1971 Initial Provisions– Jun. 1996 Jun. 1996 – Amendments or Additions since May 2000

1. Insured Financial Institutions (by act)

2. Insurance Premium Rates (Note 2)

(by approval)

3. Payment Date of Insurance Premium

(by act)

Within 3 months afterbeginning of fiscal year

Within 3 months after beginning of fiscal year. However, half may be paid within 3 months after beginning of second half of fiscal year

4. Maximum Insurance Amount (by cabinet order)

5. Special Arrangement for the Blanket Guarantee of Deposit Insurance (by act)

Introduced Until Mar. 31, 2001 (Note 5)

6. Insurance Payout by the Method of Placing Deposits (by act) Introduced

7. Partial Payment (by act) and Maximum Amount of Partial Payment (by cabinet order)

(Jul. 1986)Introduced ¥200,000

(Apr. 2001)¥600,000

8. Purchase of Deposits and Other Claims (by act)

(Apr. 1997)Introduced

9. Representation of Depositors in Court (Note 3) Procedures

(by act)


10. Financial Assistance (by act)

(Jul. 1986)Introduced

11. Purchase of Assets from Failed Financial Institutions, etc.

(by act)

12. Borrowing of Funds (General Account) Maximum Borrowings

(by cabinet order)

Banks, Sogo banks, (Note 1) Shinkin banks,

Credit cooperatives

(Jul. 1986) Labor banks joined

0.006% (FY1982) (FY1986)0.008% 0.012%

(FY1996)0.048%

(Jun. 1996) ¥1 trillion

(Apr. 1999) ¥2 trillion

(Apr. 2000)¥4 trillion¥50 billion

(Jul. 1986)¥500 billion

(Oct. 1998)Addition of purchase of assets

from banks under special public management, etc.(Note 4)

(Jun. 1996)Addition of purchase of

assets from failedfinancial institutions

(Jul. 1986)Purchase of assets from

assuming financial institutions

Principal ¥1 million(Jun. 1974)¥3 million

(Jul. 1986)¥10 million

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy


124

III. Annex

I. DIC

J’sO

perations

Main Points in the Amendment of the Deposit Insurance Act of May 2000

• Extension of Special Measures for the blanket guarantee of deposits, etc. (until end FY2001)

• Obligation for financial institutions to prepare data for aggregating depos-its held by the identical depositor, and to make necessary adjustments to computer systems, etc.

• Introduction of procedural arrangements for provisional resolutions for business transfers, etc., and court authorization procedures (subrogation) to substitute for special resolutions

• Addition of financial administrator operations• Addition of operations concerning the establishment and management of

the business of bridge banks• Addition of financial assistance in the case of partial transfer of business.• Addition of capital injection and loss sharing collateral for the assuming

financial institution• Addition of operations for loans to help failed financial institutions repay

insured deposits and prevent deterioration of asset value• Addition of operations against financial crisis (creation of the Crisis

Management Account)• Increased provision of government-granted bonds to the Special Opera-

tions Account (from ¥7 trillion to ¥13 trillion)

Main Points in the Amendment of the Deposit Insurance Act of Dec. 2002

• Addition of “securing of payment and settlements for failed financial institutions” to the purposes of the Deposit Insurance Act

• Full protection for deposits for payment and settlement purposes (as a permanent measure)

• Guarantee for the completion of ongoing settlements• Addition of obligation on financial institutions to implement systems for

ensuring the smooth payment of insurance payments for deposits for payment and settlement purposes (Additional measures established in April 2006 for smooth payment of deposits for payment and settlement purposes)

Main Points in the Organizational Restructuring Act enacted in Dec. 2002

• Simplification of merger and other procedures• Capital injection through preferred shares• Increase of insurance base amount (¥10 million × number of financial

institutions in merger, etc., 1 year after the merger, etc.)

Main points of the Strengthening Financial Functions Act, enacted in Jun. 2004

• Capital injection through the subscription of shares by the financial insti-tutions, etc.

• Establishment of the Financial Functions Strengthening Account

Main points in the Amendment of Financial Functions Strengthening Act of Dec. 2008

• Extension of application period, facilitation of credit granting to small and medium-sized entrepreneurs, and capital injection to cooperative central financial institutions, etc.

Main points in the Amendment of the Deposit Insurance Act of May 2011

• Granting of the bridge bank function to contracted bank• Addition of the purchase of loans which are difficult to be recovered

Main points in the Amendment of the Financial Functions Strengthening Act of Jun. 2011

Extension of application period and addition of special treatment under the impact of the Great East Japan Earthquake (capital injection to cooperative financial institutions jointly with cooperative central financial institutions, etc.)

Initial Provisions in 1971 Initial Provisions– Jun. 1996 Jun. 1996 – Amendments or Additions since May 2000

1. Insured Financial Institutions (by act)

2. Insurance Premium Rates (Note 2)

(by approval)

3. Payment Date of Insurance Premium

(by act)

Within 3 months afterbeginning of fiscal year

Within 3 months after beginning of fiscal year. However, half may be paid within 3 months after beginning of second half of fiscal year

4. Maximum Insurance Amount (by cabinet order)

5. Special Arrangement for the Blanket Guarantee of Deposit Insurance (by act)

Introduced Until Mar. 31, 2001 (Note 5)

6. Insurance Payout by the Method of Placing Deposits (by act) Introduced

7. Partial Payment (by act) and Maximum Amount of Partial Payment (by cabinet order)

(Jul. 1986)Introduced ¥200,000

(Apr. 2001)¥600,000

8. Purchase of Deposits and Other Claims (by act)


9. Representation of Depositors in Court (Note 3) Procedures

(by act)


10. Financial Assistance (by act)

(Jul. 1986)Introduced

11. Purchase of Assets from Failed Financial Institutions, etc.

(by act)

12. Borrowing of Funds (General Account) Maximum Borrowings

(by cabinet order)

(Oct. 2008)The Shoko Chukin Bank joined

(Jun. 2000) The Shinkin Central Bank, The Shinkumi Federation Bank& The Rokinren Bank joined

(Jul. 1986) Labor banks joined

(FY2002) 0.094%0.080%

(FY2005)0.115%0.083%

(FY2006)0.110%0.080%

(FY2010–)0.107%0.082%

(FY2009) 0.107%0.081%

(FY2008)0.108% 0.081%

(FY2012) (Note 6)

0.107%(0.089%)0.082%(0.068%)

(FY2001)Specific deposits 0.048%

Other deposits, etc. 0.048%

(FY2003)Deposits for payment and

settlement purposes 0.090%General deposits, etc. 0.080%

(FY1996)0.048%

(Apr. 2000)¥4 trillion



(Apr. 2007)¥20.58 trillion



(Apr. 2005) ¥20.6 trillion

(Apr. 2009–)¥19 trillion

(Apr. 2006) ¥21.18 trillion

(Apr. 2001) ¥6 trillion

(Oct. 1998)Addition of purchase of assets

from banks under special public management, etc.(Note 4)

(Oct. 2011)Addition of purchase of loans which are difficult to be

recovered from sound financial institutions

(Apr. 2001)Addition of purchase of assets from banks

under special crisis management, etc.

(Apr. 2003)Full amount of deposits for payment and settlement purposes+ ¥10 million principal of general deposits, etc. and related interests, etc. until the day of failure

(Apr. 2001)Principal ¥10 million

+ interests, etc. until the day of failure

(Jul. 1986)¥10 million

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

125

III. AnnexIII. A

nnexI. D

ICJ’s

Operations

(i) In relation to the Deposit Insurance ActAmendment of June 1996

(Enforced on June 21, 1996)Amendment of February 1998 (Enforced on February 18, 1998)

Amendment of October 1998 (Enforced on October 23, 1998)

Amendment of May 2000 (Enforced on June 30, 2000)

Amendment of May 2000 (Enforced on April 1, 2001)

Amendment of May 2011 (Enforced on October 29, 2011)

• Resolution and collection operations established as temporary measures

• Capital contribution to the contracted bank

• Entrusting asset purchases from failed credit coopera-tives to the contracted bank

• Expansion of the scope of entrustee to failed financial institutions

• Addition of transferees of special assets, etc. to the scope of entrustee (until March 31, 2001)

• Expansion of the scope of entrustee to failed financial institutions, etc. (failed financial institutions, bridge banks, banks under special crisis management)

• Compensation for losses of the contracted bank (limited to losses related to entrustment of asset purchases)

• Expansion of the scope of loss compensation to loss related to mergers and business transfers based on agreement

• Loan of funds to the contracted bank

• Guarantees of debt pertaining to the borrowings by the contracted bank

• Receipt of monies paid by the contracted bank

• Repeal of restrictions on profit payments

• Addition of provisions on bad debt allowance for each item such as profit payment, profit on loss compensation and loss

• Guidance and advice to the contracted bank

• Asset investigation and debt collection from debtors of loan claims, etc. transferred to the contracted bank

• Asset investigation of debtor secured by penal provisions

• Approval for entrusting of collection to the claim resolution company

Deletion of provisions

• Requests for reference to and cooperation by authorities, public organizations, etc.

• Required measures for a merger of the contracted bank with the claim resolution company

• Addition of provision on the conclusion of bridge bank function agreement with the contracted bank

• Purchases of specified difficult recovery claims and entrustment to the contracted bank

(2) Historical Development of Special Measures for the Contracted Bank, the Specified Contracted Bank and the Claim Resolution Company (As of March 31, 2012)

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy


126

III. Annex

I. DIC

J’sO

perations

(ii) In relation to the Financial Revitalization Act

Financial Revitalization Act established in October 1998 (Enforced in October 23, 1998)

Amendment of May 2000 (Enforced on

April 1, 2001)

Amendment of June 2001 (Enforced on

June 27, 2001)

Amendment of December 2001 (Enforced on January 11, 2002)

Amendment of April 2003 (Enforced on

April 10, 2003)

Amendment of June 2009 (Enforced on

September 28, 2009)

Amendment of November 2011 (Enforced on February 23, 2012)

• Asset purchases from financial institutions, etc., and entrustment to the specified contracted bank

No change • Extension of the period where sound financial institutions, etc. may apply for purchase of assets (until March 31, 2004)

• Use of market value for asset purchase prices

• Participation in bidding enabled

• Clarification of provisions to make efforts on diversification and acceleration of methods of disposing purchased assets, and reconstruction of debtors

• Extension of the period that sound financial institutions, etc., can apply to purchase assets (until March 31, 2005)

• Addition of purchase of assets of the IRCJ

• Addition of purchase of assets of the ETIC

• Addition of purchase of assets from the Corporation for Revitalizing Earthquake-Affected Business

• Resolution and collection of purchased assets

• Loans to the specified contracted bank

• Guarantee of borrowings by the specified contracted bank

• Receipt of monies paid from the specified contracted bank

• Loss compensation for the specified contracted bank

• Approval of implementation plans and funding plans for the specified contracted bank

• Guidance and advice to the specified contracted bank

• Asset investigation (secured by penal provisions) and debt collection from debtors of loan claims, etc. transferred to the specified contracted bank


• Approval for entrusting collection to the claim resolution company

Deletion of provisions

(iii) In relation to the Early Strengthening ActEstablishment of Early Strengthening Act, in October 1998

(Enforced on October 23, 1998)Amendment of May 2000 (Enforced on June 30, 2000)

• Entrustment of the subscription, etc. for shares, etc. to the contracted bank • Applications for subscription, etc. for shares, etc. of “specified cooperative financial institutions, etc.” are set until March 31, 2002

• Compensation for losses of the contracted bank


• Guarantee of debts pertaining to the borrowings by the contracted bank


• Guidance and advice when a share issuing bank to the contracted bank becomes a subsidiary of the contracted bank

(iv) In relation to the Financial Functions Strengthening ActEstablishment of Financial Functions Strengthening Act in

June 2004 (Enforced on August 1, 2004)Amendment of December 2008

(Enforced on December 17, 2008)Amendment of June 2011

(Enforced on July 27, 2011)

• Entrustment of a) subscription, etc. for shares, etc.; and b) purchase of trust beneficial interests, etc. from the cooperative central financial institution, to the contracted bank

• Extension of application period for subscription, etc. for shares, etc., and purchases of trust beneficiary interests, etc. (until March 31, 2012)

• Extension of application period for subscription, etc. for shares, etc., and purchases of trust beneficiary interests, etc. (until March 31, 2017)

• Compensation for losses of the contracted bank


• Guarantee of debts pertaining to the borrowings by the contracted bank


II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

127

III. AnnexIII. A

nnexI. D

ICJ’s

Operations

(v) In relation to the Jusen ActEstablishment of Jusen Act in June 1996

(Enforced on June 21, 1996)Amendment of April 1998

(Enforced on April 10, 1998)Amendment of October 1998

(Enforced on October 23, 1998)Amendment of May 2000

(Enforced on April 1, 2001)

• Capital contributions, granting subsidies, debt guarantees, guidance and advice to the claim resolution company

• Asset investigation (secured by penal provisions) and debt collection from debtors of loan claims, etc. transferred to the claim resolution company

• Expansion of scope of investigations with penal provisions to real estate with collateral provided by third parties

• Approval for entrusting collections to the contracted bank Deletion of provisions


• Borrowings from financial institutions, etc. (in a framework separate from general operations to the extent of amount of capital contributions from the government to the Jusen Account (¥5 billion))

• Government subsidies, receipt of capital contributions from the BOJ and private financial institutions, etc., payment to the national treasury of profits relating to collection by the claim resolution company

• Revision of method of paying collected profit to the claim resolution company to the national treasury and receiving government subsidies (every fiscal year if, after offsetting 1/2 of the secondary losses against the collected profit, any profit remains, such profit will be paid to the national treasury; if any shortfall remains, government subsidies will be granted)

• Coordination discussion group established by government

• Measures necessary for a merger of the claim resolution company and the contracted bank

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy


128

III. Annex

I. DIC

J’sO

perations

(i) Capital injection operations pursuant to the former Financial Functions Stabilization Act (as of March 31, 2012) (Unit: billion yen, %)

Capital Injection (Subordinated Bonds and Subordinated Loans) Management/Disposal Status

Name of Financial InstitutionCapital

InjectionDate

Amount

Rate (L = 6m LIBOR)

Type Maturity DisposalDate Notes0 – 5th

Year6th Yearonwards

Mizuho FG(Fuji Bank)

March1998 100 L + 1.10 L + 2.60 Subordinated

bond Perpetual March 2004 The issuer called for redemption in full

Mizuho FG(Industrial Bank of Japan)


bond 10 years March 2004 The issuer called for early redemption in full

Mizuho FG(Yasuda Trust & Banking)


bond Perpetual

March 2003 The issuer partially called for early redemption of 50 billion JPY (out of 150 billion JPY)

September 2003 The issuer partially called for early redemption of 50 billion JPY (out of 100 billion JPY)

March 2004 The issuer partially called for early redemption of 25 billion JPY (out of 50 billion JPY)

September 2004 The issuer called for early redemption of the remaining 25 billion JPY

Sumitomo Mitsui FG(Sakura Bank)



Sumitomo Mitsui FG(Sumitomo Bank)



Bank of Tokyo-Mitsubishi March1998 100 L + 0.90 L + 2.40 Subordinated

bond Perpetual February 2000 The issuer repurchased in full (repurchase amount: 100.560 billion JPY)

Mitsubishi Trust & Banking March1998 50 L + 1.10 L + 2.60 Subordinated

bond Perpetual December 2000 The issuer repurchased in full (repurchase amount: 50.002 billion JPY)

UFJ HD(Sanwa Bank)


bond 10 years March 2003 The issuer called for early redemption in full

UFJ HD(Tokai Bank)

1998March 100 L + 0.90 L + 2.40 Subordinated

loan PerpetualMay 2001 Perpetual subordinated loan changed into perpetual subordinated bonds

March 2003 The issuer called for redemption in full

UFJ HD(Toyo Trust & Banking)



Resona HD(Asahi Bank)


loan Perpetual October 2005 The borrower executed the option to repay in full

Resona HD(Daiwa Bank)

March1998 100 L + 2.70

(Note 3)

L + 2.70(On and

after July 1, 2008: L + 3.95)(Note 3)

Subordinatedloan Perpetual September

2005 The borrower executed the option to repay in full

Sumitomo Trust & Banking March1998 100 L + 1.10 L + 2.60 Subordinated


Mitsui Trust HD(Mitsui Trust & Banking)



Mitsui Trust HD(Chuo Trust & Banking)


loan Perpetual March 2003 The borrower executed the option to repay in full

Bank of Yokohama March1998 20 L + 1.10 L + 2.60 Subordinated

loan Perpetual May 2003 The borrower executed the option to repay in full

Hokuriku Bank March1998 20 L + 2.45 L + 3.95 Subordinated

loan Perpetual

September 2005

The borrower partially executed the option to repay 10 billion JPY (out of 20 billion JPY)

March 2006 The borrower executed the option to repay the remaining 10 billion JPY

Ashikaga Bank March1998 30 L + 2.95 L + 4.45 Subordinated


Shinsei Bank(the Long-Term Credit Bank of Japan)

March1998 46.6 L + 2.45 L + 3.95 Subordinated

bond Perpetual March 2003 The borrower executed the option to repay in full

Capital Injection (Convertible Preferred Shares) Management/Disposal Status


InjectionDate

Amount Dividend Yield

Beginningof Conversion

PeriodMandatory Acquisition Date Disposal

Date Notes

Mizuho FG(Dai-Ichi Kangyo Bank)

March1998 99 0.75 1 July 1998 1 August 2005 August 2004 The issuer repurchased in full (repurchase amount: 59.489 billion JPY)

Mitsui Trust HD(Chuo Trust & Banking)

March1998 32 2.50 1 July 1998 1 August 2018 July 2006

The issuer acquired preferred shares in full and issued new common shares to DICJ in exchange for such preferred shares. DICJ sold such common shares in full through the Public Offering at the request of the issuer (proceeds from PO: 97.926 billion JPY)

Shinsei Bank(the Long-Term Credit Bank of

Japan)

March1998 130 1.00 1 October

1998 1 April 2008

October 1998 Acquired by the DICJ based on the decision to impose Special Public Management

March 2000 Decreased in the number by 25,472,000 shares out of 100,000,000 shares on the decision to implement reduction of capital

March 2008 The issuer acquired the remaining 74,528,000 preferred shares, at the request of DICJ, and issued new 269,128,888 common shares to DICJ in exchange for such preferred shares

Aozora Bank(the Nippon Credit Bank)

March1998 60 1.00 1 October

1998 1 April 2018

December 1998 Acquired by the DICJ based on the decision to impose Special Public Management

October 2000 Decreased in the number by 71,856,000 shares out of 120,000,000 shares on the decision to implement reduction of capital (and reduced dividend yield (3%→1%))

Total Amount of Capital Injection 1,815.6

Total Amount of the Disposed Book Value 1,625.6

Outstanding Balance 190.0 Disposed

Notes: 1. Current names are used for the names of financial institutions. However, for the cases of financial institutions whose disposal has been completed, names at the time of the completion of disposal are used.

2. Entries in parentheses are names at the time of capital injection.

3. “L” stands for 3-month JPY LIBOR.

2. II. Overview of the DICJ’s Activities in FY2011(1) List of Capital Injection Operations (for each Act)

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

129

III. AnnexIII. A

nnexI. D

ICJ’s

Operations

(ii) Capital injection operations pursuant to the early Strengthening Act (as of March 31, 2012) (Unit: billion yen, %)

Capital Injection (Subordinated Bonds and Subordinated Loans) (L = 6m LIBOR) Management/Disposal Status


InjectionDate

Amount

ApprovalRate

(L = 6mLIBOR)

Beginningof Step-up

Rate after Beginning of Step-up

Type (Maturity) DisposalDate Notes


March 1999 100 L + 0.75 1 April

2004 L + 1.25 Subordinated loan (10 years)

November 2000 Subordinated loan changed into subordinated bonds

March 2004 The issuer called for early redemption in full


March 1999 100 L + 0.75 1 April


November 2000 Subordinated loan changed into subordinated bonds

March 2005 The issuer called for early redemption in full

Mizuho FG(Fuji Bank)

March 1999 200 L + 0.65

1 April 2004 L + 1.35

Subordinated bond (perpetual)

September 2004 The issuer called for redemption in full

1 April 2009 L + 2.15

Mizuho FG(Industrial Bank of Japan)

March 1999 250 L + 0.98 1 April

2004 L + 1.48 Subordinated bond (perpetual) March 2004 The issuer called for redemption in full

UFJ HD(Sanwa Bank)

March 1999 100 L + 0.34 1 October

2004 L + 1.34 Subordinated bond (perpetual)

September 2005 The issuer called for redemption in full

Mitsubishi Trust & Banking March 1999 100 L + 1.75 1 April

2004 L + 2.25 Subordinated bond (perpetual)

December 2000 The issuer repurchased in full (repurchase amount: 101.807 billion JPY)


March 1999 100 L + 1.04 1 April

2009 L + 2.54 Subordinated loan (perpetual)

November 2006

The borrower partially repaid 20 billion JPY (out of 100 billion, repayment amount: 20.320 billion JPY)

June 2007

The borrower partially repaid 35 billion JPY (out of 80 billion, repayment amount: 35.550 billion JPY)


Sumitomo Trust & Banking March 1999 100 L + 1.53 1 April

2006 L + 2.03 Subordinated bond (12 years) January 2004 The issuer repurchased in full (repurchase amount: 102.366 billion JPY)

Chuo Mitsui Trust HD(Mitsui Trust & Banking)

March 1999 150 L + 1.49 1 April


March 2004 The borrower prartially executed the option to repay 10 billion JPY (out of 150 billion JPY)

September 2004

The borrower partially executed the option to repay 40 billion JPY (out of 140 billion JPY)


Bank of Yokohama March 1999

50 L + 1.65 1 April 2004 L + 2.15 Subordinated loan

(perpetual) March 2004 The borrower executed the option to repay in full

50 L + 1.07 1 April 2004 L + 1.57 Subordinated loan

(10 years 2 months) May 2004 The borrower executed the option to repay in full

Momiji HD(Hiroshima-Sogo Bank)

Septem-ber 1999 20 L + 2.80 1 October

2004 L + 4.14 Subordinated loan (perpetual)

September 2005 The borrower executed the option to repay in full

Kansai Sawayaka Bank March 2001 4 L + 1.87 1 April

2006 L + 2.37 Subordinated bond (10 years) January 2004 The issuer repurchased in full (repurchase amount: 4.012 billion JPY)

Capital Injection (Preferred Shares) Management/Disposal Status


InjectionDate

Amount DividendYield

Beginningof

ConversionPeriod

MandatoryAcquisi-

tionDate

Type DisposalDate Notes

Mizuho FG (Dai-Ichi Kangyo Bank)

March 1999

200 0.41 1 August 2004

1 August 2006 Convertible

March 2005 The issuer partially repurchased 77.2 billion JPY (out of 200 billion JPY) (repurchase amount: 60.525 billion JPY)

August 2005 The issuer repurchased the remaining 122.8 billion JPY (repurchase amount: 115.293 billion JPY)

200 0.70 1 August 2005

1 August 2008 Convertible August 2005 The issuer repurchased in full (repurchase amount: 187.578 billion JPY)

300 2.38 — — Non-convertible July 2006The issuer repurchased in full mandatorily based on both its articles of incorporation and the subscription agreement of the shares (repurchase amount: 301.858 billion JPY)

Mizuho FG (Fuji Bank)

March 1999

300 2.10 — — Non-convertible July 2006The issuer repurchased in full mandatorily based on both its articles of incorporation and the subscription agreement of the shares (repurchase amount: 301.640 billion JPY)

250 0.55 1 October 2006

1 February 2011 Convertible October 2005

The issuer repurchased in full mandatorily based on both its articles of incorporation and the subscription agreement of the shares (repurchase amount: 250.735 billion JPY)

250 0.40 1 October 2004

1 February 2009 Convertible

March 2005 The issuer partially repurchased 131.4 billion JPY (out of 250 billion JPY, repurchase amount: 148.784 billion JPY)


Mizuho FG (Industrial Bank of Japan)

March 1999

175 1.401

September 2003

1 September

2009Convertible

August 2004 The issuer partially repurchased 133.75 billion JPY (out of 175 billion JPY, repurchase amount: 180.482 billion JPY)

March 2005 The issuer repurchased the remaining 41.25 billion JPY (repurchase amount: 50.651 billion JPY)

175 0.43 1 July 20031

September 2009

Convertible August 2005 The issuer repurchased in full (repurchase amount: 233.707 billion JPY)

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy


130

III. Annex

I. DIC

J’sO

perations



InjectionDate


Beginningof

ConversionPeriod

MandatoryAcquisi-

tionDate


Sumitomo Mitsui FG (Sakura Bank)

March 1999 800 1.37 1 October

20021 October

2009 Convertible

November 2004

DICJ executed the option to convert 105 billion JPY preferred shares (out of 800 billion JPY) into common shares at the request by the issuer. DICJ sold such common shares in full to the issuer through mostly ToSTNeT-2 (proceeds of sale: 200.629 billion JPY)

September 2006

The issuer partially repurchased 450 billion JPY (out of 695 billion JPY, repurchase amount: 653.040 billion JPY)

October 2006 The issuer partially repurchased 195 billion JPY (out of 245 billion JPY, repurchase amount: 222.242 billion JPY)

October 2006

The issuer acquired the remaining 50 billion JPY preferred shares and issued new common shares to DICJ in exchange for such preferred shares. DICJ sold such common shares in full to the issuer through mostly ToSTNeT-2 (proceeds of sale: 76.793 billion JPY)

Sumitomo Mitsui FG (Sumitomo Bank)

March 1999

201 0.35 1 May 2002

27 February

2009Convertible

November 2004

DICJ executed the option to convert 96 billion JPY preferred shares (out of 201 billion JPY) into common shares at the request by the issuer. DICJ sold such common shares in full to the issuer through mostly ToSTNeT-2 (proceeds of sale: 67.710 billion JPY)

May 2006 The issuer repurchased the remaining 105 billion JPY (repurchase amount: 141.960 billion JPY)

300 0.95 1 August 2005

27 February

2009Convertible

May 2006 The issuer partially repurchased 99 billion JPY (out of 300 billion JPY, repurchase amount: 133.957 billion JPY)

September 2006

The issuer repurchased the remaining 201 billion JPY (repurchase amount: 245.079 billion JPY)

Mitsubishi UFJ FG (Sanwa Bank)

March 1999 600 0.53 1 July 2001 1 August

2008 Convertible

October 2005

DICJ executed the option to convert 207.9 billion JPY preferred shares (out of 600 billion JPY) into common shares at the request by issuer. DICJ sold such common shares in full to the issuer through mostly ToSTNeT-2 (proceeds of sale: 171.869 billion JPY)DICJ executed the option to convert 207.9 billion JPY preferred shares (out of 600 billion JPY) into common shares at the request by issuer. DICJ sold such common shares in full to the issuer through mostly ToSTNeT-2 (proceeds of sale: 171.869 billion JPY)

December 2005

DICJ executed the option to convert 155.7 billion JPY preferred shares (out of 392.1 billion JPY) into common shares at the request by issuer. DICJ sold such common shares in full to the issuer through mostly ToSTNeT-2 (proceeds of sale: 149.862 billion JPY)

December 2005

DICJ partially sold 53.1 billion JPY (out of the remaining 236.4 billion JPY) to the other party/parties at the request by the issuer (proceeds of sale: 55.426 billion JPY)

March 2006

DICJ executed the option to convert 155.4 billion JPY preferred shares (out of 183.3 billion JPY) into common shares at the request by issuer. DICJ sold such common shares in full through ToSTNeT-2 to the issuer and regular transaction on the stock exchange (proceeds of sale: 160.469 billion JPY)

May 2006

The issuer acquired the remaining 27.9 billion JPY preferred shares and issued new common shares to DICJ in exchange for such preferred shares. DICJ sold such common shares in full to the issuer through mostly ToSTNeT-2 (proceeds of sale: 25.206 billion JPY)

Mitsubishi UFJ FG(Tokai Bank)

March 1999

300 0.93 1 July 2002 31 March 2009 Convertible

October 2005

DICJ executed the option to convert 115.7 billion JPY preferred shares (out of 300 billion JPY) into common shares at the request by the issuer. DICJ sold such common shares in full to the issuer through mostly ToSTNeT-2 (proceeds of sale: 177.935 billion JPY)

March 2006

DICJ executed the option to convert 24.9 billion JPY preferred shares (out of 184.3 billion JPY) into common shares at the request by the issuer. DICJ sold such common shares in full through ToSTNeT-2 to the issuer and regular transaction on the stock exchange (proceeds of sale: 39.669 billion JPY)

June 2006The issuer acquired the remaining 159.4 billion JPY preferred shares and issued new common shares to DICJ in exchange for such preferred shares. DICJ sold such common shares in full to the issuer (proceeds of sale: 219.637 billion JPY)

300 0.97 1 July 2003 31 March 2009 Convertible

May 2006

The issuer acquired 178.714 billion JPY preferred shares (out of 300 billion JPY) and issued new common shares to DICJ in exchange for such preferred shares. DICJ sold such common shares in full to the issuer through mostly ToSTNeT-2 (proceeds of sale: 249.644 billion JPY)


Mitsubishi UFJ FG(Toyo Trust & Banking)


2009 Convertible

December 2005

DICJ executed the option to convert 24.7 billion JPY preferred shares (out of 200 billion JPY) into common shares at the request by the issuer. DICJ sold such common shares in full to the issuer through mostly ToSTNeT-2 (proceeds of sale: 50.579 billion JPY)

December 2005

DICJ sold 22.4 billion JPY (out of 175.3 billion JPY) to the other party/parties at the request by the issuer (proceeds of sale: 45.969 billion JPY)DICJ sold 22.4 billion JPY (out of 175.3 billion JPY) to the other party/parties at the request by the issuer (proceeds of sale: 45.969 billion JPY)

March 2006 DICJ sold 136.2 billion JPY (out of 152.9 billion JPY) to the other party/parties at the request by the issuer (proceeds of sale: 300.185 billion JPY)


Mitsubishi Trust & Banking March 1999 200 0.81 31 July

20031 August

2008 Convertible January 2001

DICJ sold in full to the other party/parties at the request by the issuer (proceeds of sale: 210.350 billion JPY)DICJ sold in full to the other party/parties at the request by the issuer (proceeds ofsale: 210.350 billion JPY)

Resona HD(Daiwa Bank)

March 1999 408 1.06 30 June

19991 April 2009 Convertible

January 2007 The issuer partially repurchased 244.679 billion JPY (out of 408 billion JPY, repurchase amount: 293.370 billion JPY)



March 1999

300 1.15 1 July 20021

December 2009

Convertible

January 2007 The issuer partially repurchased 288.03 billion JPY (out of 300 billion JPY, repurchase amount: 276.629 billion JPY)


100 1.48 1 July 20031

December 2014

Convertible

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

131

III. AnnexIII. A

nnexI. D

ICJ’s

Operations



InjectionDate


Beginningof

ConversionPeriod

MandatoryAcquisi-

tionDate


Sumitomo Trust & Banking March 1999 100 0.76 1 April

200131 March

2009 Convertible January 2004 DICJ sold in full to the other party/parties at the request by the issuer (proceeds of sale: 138.080 billion JPY)

Sumitomo Mitsui Trust HD(Mitsui Trust & Banking)

March 1999 250.3 1.25 1 July 1999 1 August

2009 Convertible

July 2007

The issuer acquired 37 billion JPY preferred shares (out of 250.25 billion JPY) and issued new common shares to DICJ in exchange for such preferred shares. DICJ sold such common shares in full through the Public Offering at the request of the issuer (proceeds of PO: 86.662 billion JPY)

July 2008 The issuer partially repurchased 86.4 billion JPY (out of 213.25 billion JPY, repurchase amount: 127.386 billion JPY)

July 2008

The issuer acquired 76.5 billion JPY preferred shares (out of 126.85 billion JPY) and issued new common shares to DICJ in exchange for such preferred shares. DICJ sold such common shares in full through the Public Offering at the request of the issuer (proceeds of PO: 103.530 billion JPY)

August 2009

The issuer, on the Mandatory Acquisition Date, acquired the remaining 50.35 billion JPY preferred shares mandatorily based on its articles of incorporation, etc. and issued new 125,875,000 common shares to DICJ in exchange for such preferred shares.

Sumitomo Mitsui Trust HD (Chuo Trust & Banking)


2009 Convertible August 2009The issuer, on the Mandatory Acquisition Date, acquired 150 billion JPY preferred shares mandatorily based on its articles of incorporation, etc. and issued new 375,000,000 common shares to DICJ in exchange for such preferred shares.

Bank of Yokohama March 1999

70 1.13 1 August 2001

31 July 2009 Convertible

July 2004

DICJ executed the option to convert 55 billion JPY preferred shares (out of 70 billion JPY) into common shares at the request by the issuer. DICJ sold such common shares in full through the Public Offering (proceeds of PO: 81.415 billion JPY)

August 2004 The issuer repurchased the remaining 15 billion JPY (repurchase amount: 17.259 billion JPY)

30 1.89 1 August 2004

31 July 2009 Convertible July 2004 The issuer repurchased in full (repurchase amount: 34.842 billion JPY)

Ashikaga Bank

September 1999 75 0.94

29 September

2000

30 September

2009Convertible

February 2006The issuer dissolved in December 2005, and DICJ received distribution of residual assets (distribution amount: 2.776 billion JPY) for the preferred shares (book value: 105 billion JPY in total)November

1999 30 0.9430

November 2000

30 November

2009Convertible

Hokuriku Bank September 1999 75 1.54 1 March

200130 July 2010 Convertible

August 2007 The issuer partially repurchased 35 billion JPY (out of 75 billion JPY, repurchase amount: 40.016 billion JPY)

June 2008 The issuer partially repurchased 15 billion JPY (out of 40 billion JPY, repurchase amount: 18.018 billion JPY)

July 2009 The issuer repurchased the remaining 25 billion JPY (repurchase amount: 29.805 billion JPY)

Hokkaido Bank March 2000 45 1.16 1 August

20011 August

2010 Convertible

September 2000 Perpetual subordinated bonds converted into preferred shares as originally planned

June 2008 The issuer partially repurchased 10.032 billion JPY (out of 45.03 billion JPY, repurchase amount: 12.093 billion JPY)

July 2009 The issuer partially repurchased 15.048 billion JPY (out of 34.998 billion JPY, repurchase amount: 18.107 billion JPY)


Bank of the Ryukyus September 1999 40 1.50

29 December

2000

1 October 2010 Convertible


October 2006 The issuer partially repurchased 34 billion JPY (out of 40 billion JPY, repurchase amount: 40.593 billion JPY)


Momiji HD (Hiroshima-Sogo Bank)

September 1999 20 1.41

30 September

2004

1 August 2011 Convertible December

2005

DICJ sold 17 billion JPY to the other party/parties at the request by the issuer (proceeds of sale: 25.075 billion JPY). The issuer repurchased 3 billion JPY (repurchase amount: 4.425 billion JPY).

Kumamoto Family Bank February 2000 30 1.33

2 September

2002

1 March 2014 Convertible May 2006 DICJ sold in full to the other party/parties at the request by the issuer (proceeds of

sale: 31.552 billion JPY)

Shinsei Bank (the Long-Term Credit Bank of

Japan)

March 2000 240 1.21 1 August

20051 August

2007 Convertible

August 2006

The issuer acquired 120 billion JPY preferred shares (out of 240 billion JPY) and issued new common shares to DICJ in exchange for such preferred shares. DICJ sold such common shares in full to the issuer through mostly ToSTNeT-2 (proceeds of sale: 150.625 billion JPY)

August 2007

The issuer, on the Mandatory Acquisition Date, acquired the remaining 120 billion JPY preferred shares mandatorily based on its articles of incorporation, etc. and issued new 200,000,000 common shares to DICJ in exchange for such preferred shares.

Chiba Kogyo Bank September 2000 60 1.29

30 September

2002

31 March 2014 Convertible

Yachiyo Bank September 2000 35 1.13

30 September

2002

30 September

2010Convertible

February 2001 Perpetual subordinated bonds converted into preferred shares as originally planned

March 2006 DICJ sold in full to the other party/parties at the request by the issuer (proceeds of sale: 40.068 billion JPY)

Aozora Bank (Nippon Credit Bank)

October 2000 260 1.24 3 October

20053 October

2012 Convertible November 2006

The issuer acquired 104.72 billion JPY preferred shares (out of 260 billion JPY) and issued new common shares to DICJ in exchange for such preferred shares. DICJ sold such common shares in full through the Public Offering at the request of the issuer (proceeds of PO: 132.646 billion JPY)

Kansai Sawayaka Bank March 2001 8 1.08 1 August

200231 March

2011 Convertible October 2003 The issuer repurchased in full (repurchase amount: 10.584 billion JPY)

Higashi-Nippon Bank March 2001 20 1.10 31 March

200331 March

2011 Convertible March 2011 The issuer repurchased in full (repurchase amount: 20.098 billion JPY)

Resona HD (Kinki Osaka Bank) April 2001 60 1.36 1 January


Gifu Bank April 2001 12 1.21 1 March 2002

1 April 2011 Convertible December

2010 The issuer repurchased in full (repurchase amount: 12.106 billion JPY)

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy


132

III. Annex

I. DIC

J’sO

perations



InjectionDate


Beginningof

ConversionPeriod

MandatoryAcquisi-

tionDate


Nishi-Nippon City Bank (Fukuoka City Bank)

January 2002 70 1.20 31 January



September 2006

The issuer partially repurchased 35 billion JPY (out of 70 billion JPY, repurchase amount: 41.163 billion JPY)


Wakayama Bank January 2002 12 1.34 1 May



December 2005

DICJ sold in full to the other party/parties at the request by the issuer (proceeds of sale: 12.113 billion JPY)

Kyushu-Shinwa HD (Kyushu Bank)

March 2002 30 1.25 1 March



February 2008The issuer dissolved in August 2007, and DICJ received distribution of residual assets (distribution amount: 30 billion JPY) for the preferred shares (book value: 30 billion JPY)

Total Amount of Capital Injection 8,605.3


Outstanding Balance 695.7

Notes: 1. Current names are used for the names of financial institutions. However, for the cases of financial institutions whose disposal has been completed, names at the time of the completion of disposal are used.

2. Entries in parentheses are names at the time of capital injection.

(iii) Capital injection operations pursuant to the Organizational Restructuring Act (as of March 31, 2012) (Unit: billion yen, %)

Capital Injection (Subordinated Loan) Management/Disposal Status


Injection Date

Amount Approved Rate (L = 6m LIBOR)

Beginning of Step-up

Rate after Beginning of Step-up

Maturity DisposalDate Notes

Kanto Tsukuba Bank Septem-ber 2003 6

L + 3.76 (There are rate adjustment clauses which are dependent on the condition of fulfillment of the plan)

1 October 2008 L + 4.76 10 years September

2008 The borrower executed the option to repay in full

Total amount of capital injection 6

Total amount of the disposed book value 6

Outstanding balance — Disposed

Fully Disposed Partially Disposed

Common shares have been held through mandatory acquisition

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

133

III. AnnexIII. A

nnexI. D

ICJ’s

Operations

(iv) Capital injection operations pursuant to the Financial Functions Strengthening Act (as of March 31, 2012) (Unit: billion yen, %)

Capital Injection (Subordinated Bonds and Subordinated Loans) Management/Disposal Status


Injection Date

Amount Approved Rate Type Disposal Date Notes

77 Bank December 2011 20 Funding cost as an annualized rate of preferred

dividend (Note 1)

Subordinated loan(10 years 3 months)

Capital Injection (Preferred shares (convertible)) Management/Disposal Status

Name of Financial Institution Capital Injection Date Amount Dividend Yield

(T = 12m TIBOR)

Beginning ofConversion

PeriodMandatory Acquisition Date Disposal Date Notes

Kiyo HD (Kiyo Bank) (Note 2) November 2006 31.5 T + 1.15(cap rate: 7.50) 1 October 2011 1 October 2016

Howa Bank (Note 3) December 2006 9 1.84 (until March 2009) 6m TIBOR + 1.20 (after April 2009) 1 April 2008 To be designed by the board of directors

on and after 2 April 2020

North Pacific Bank March 2009 100 T + 1.00 (cap rate: 8.00) 1 January 2013 1 April 2024

Fukuho Bank March 2009 6 1.90 (until March 2012) T + 1.10 (after April 2012) (cap rate: 8.00)

1 October 2011 1 April 2024

Minami Nippon Bank March 2009 15 T + 1.05 (cap rate: 8.00) 1 October 2012 1 April 2024

Michinoku Bank September 2009 20 T + 0.95 (cap rate: 8.00) 1 April 2017 1 October 2024

Kirayaka Bank September 2009 20 T + 1.15 (cap rate: 8.00) 1 October 2010 1 October 2024

Daisan Bank September 2009 30 T + 1.00 (cap rate: 8.00) 1 October 2012 1 October 2024

Towa Bank December 2009 35 T + 1.15 (cap rate: 8.00) 29 December 2010 29 December 2024

Bank of Kochi December 2009 15 T + 1.10 (cap rate: 8.00) 29 December 2010 29 December 2024

FIDEA HD (Hokuto Bank) (Note 2) March 2010 10 T + 1.00 (cap rate: 8.00) 1 April 2013 1 April 2025

Miyazaki Taiyo Bank March 2010 13 T + 1.05 (cap rate: 8.00) 1 October 2010 1 April 2025

Sendai Bank September 2011 30 Funding cost as an annualized rate of preferred dividend (Note 1)

1 April 2013 1 October 2036

Tsukuba Bank September 2011 35 Funding cost as an annualized rate of preferred dividend (Note 1)

1 July 2012 1 October 2031

Capital Injection (Trust Right and Preferred Trust Right) Management/Disposal Status

Name of Financial Institution Capital Injection Date Amount Dividend Yield

(T = 12m TIBOR) Trust Period Reference Disposal Date Notes

Shinkumi Federation Bank (Yamanashikenmin Shinkumi

Bank) (Note 2)

September 2009 45.0 T + 1.73 (cap rate: 8.00) 25 years (extendable) Preferred trust rights out of trust rights

Shinkumi Federation Bank (Soso Shinkumi Bank) (Note 2)

January 2012 13.9 Funding cost as an annualized rate of preferred dividend (Note 1)

10 years (extendable)

(Note 4)

Shinkumi Federation Bank (Iwaki Shinkumi, Ltd.) (Note 2)

January 2012 17.5 Funding cost as an annualized rate of preferred dividend (Note 1)


(Note 4)

Shinkin Central Bank (Miyako Shinkin Bank) (Note 2)

February 2012 8.5 Funding cost as an annualized rate of preferred dividend (Note 1)


(Note 4)

Shinkin Central Bank (Kesennuma Shinkin Bank) (Note 2)



(Note 4)

Shinkin Central Bank(Ishinomaki Shinkin Bank) (Note 2)



(Note 4)

Shinkin Central Bank (Abukuma Shinkin Bank) (Note 2)



(Note 4)

Shinkumi Federation Bank (Nasu Shinkumi Bank) (Note 2)

March 2012 5.4 Funding cost as an annualized rate of preferred dividend (Note 1)

25 years (extendable) Preferred trust rights out of trust rights

Total amount of Capital Injection 526

Total amount of the Disposed Book Value —

Outstanding Balance 526 Capital injection based on special measures concerning to the Great East Japan Earthquake

Notes: 1. Approved rates or dividend yields applied for capital injection based on special measures concerning to the Great East Japan Earthquake are “funding cost as an annualized rate of preferred dividend” annouced by DICJ in each fiscal year. However, 12-month Japanese Yen TIBOR or 8%, whichever lower will be used as a cap rate.

2. Names of financial institutions in parentheses next to Kiyo HD, FIDEA HD, Shinkumi Federation Bank and Shinkin Central Bank indicate actual entities for capital injection.

3. Preferred shares with voting rights to appoint or dismiss directors.

4. Within 10 years following capital injection (extendable), either (i) “an application for authorization of management improvement” or (ii) “an application for authorization of capital reorganization associated with business restructuring” shall be filed with the competent minister.

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy


134

III. Annex

I. DIC

J’sO

perations

(v) Capital injection operations pursuant to the Deposit Insurance Act (Response against financial crises) (as of March 31, 2012) (Unit: billion yen, %)

Capital Injection (Common Shares) Management/Disposal Status

Name of Financial Institution(Initial Capital InjectionRecipient)

Capital InjectionDate Amount — Disposal

Date Notes Remaining amountafter Disposal

Resona HD (Resona Bank) June 2003 296.438 —

February 2005

The issuer partially repurchased 2.730 billion JPY out of 296.438 billion JPY through ToSTNeT-2 (repurchase amount: 11.078 billion JPY)

293.708

June 2008DICJ sold partially 14.444 billion JPY out of the remain-ing 293.708 billion JPY to the other party/parties at the request by the issuer (proceeds of sale: 50 billion JPY)

279.264

December 2008

DICJ sold partially 17.568 billion JPY out of the remain-ing 279.264 billion JPY to the other party/parties at the request by the issuer (proceeds of sale: 50 billion JPY)

261.697

Capital Injection (Convertible Preferred Shares) Management/Disposal Status

Name of Financial Institution(Initial Capital Injection Recipient)

Capital InjectionDate Amount

Dividend Yield(L = 1 year JPY

LIBOR)

Beginningof

ConversionPeriod

MandatoryAcquisition

DateName Disposal

Date Notes Remaining amountafter Disposal

Resona HD(Resona Bank) June 2003

550 L + 0.50 1 July 2006 (perpetual) Type 1 No. 1

August 2010 The issuer partially repurchased 400 billion JPY (out of 550 billion JPY, repurchase amount: 425.72 billion JPY) 150

March 2011 The issuer repurchased the remaining 150 billion JPY (repurchase amount: 160.095 billion JPY) —

563.562 L + 0.50 1 July 2008 (perpetual) Type 2 No. 1

December 2008

DICJ demanded for purchase of fractional share (0.001 share) (200 JPY) in implementation of stock consolidation at the request by the issuer (proceeds of sale: 207 JPY)

563.562

March 2011 The issuer repurchased 563.562 billion JPY (repurchase amount: 610.619 billion JPY) —

550 L + 0.50 1 July 2010 (perpetual) Type 3 No. 1 March 2011 The issuer partially repurchased 100 billion JPY (out of

550 billion JPY, repurchase amount: 111.250 billion JPY) 450

Total Amount of Capital Injection 1,960


Outstanding Balance 711.7

Notes: 1. DICJ initially subscribed common shares and preferred shares issued by Resona Bank in June 2003. In August 2003, Resona HD issued new shares to DICJ in exchange for such shares through an exchange of shares.

2. Preferred shares with voting rights

Fully Disposed Partially Disposed

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

135

III. AnnexIII. A

nnexI. D

ICJ’s

Operations

(i) Capital injection scheme based on the Deposit Insurance Act(a) Outline of the capital injection scheme based on Article 102, paragraph 1, item 1 of the Deposit Insurance Act

DICJ has carried out the capital injection operations under the Former Financial Functions Stabilization Act, Early Strengthening Act and other Acts for the stabilization of financial functions. Among the current six capital injection schemes, two of them are based on the Deposit Insurance Act and four of them are based on the amended Financial Functions Strengthening Act. This scheme is one of those based on the Deposit Insurance Act, and implemented when it is found that serious problems may arise in the maintenance of the stability of the financial system of the country or the area where financial institutions are carrying out their business (at the time of handling financial crisis) (known as Measure No. 1). This scheme has been used for Resona Bank in June 2003.

Acknowledgement of the necessity

DICJ

Financial Institutions, etc.

Bank of Japan/Financial Institutions

/Others

Subscription, etc. Implementation of the Plan

Prime Minister GovernmentPrime Minister

Disposal

Prime Minister andMinister of Finance

Funding, etc.

Prime Minister andMinister of FinanceMinister of FinancePrime Minister

Financial System Manegement Council (Act 102 I)

Agreement to a decision on the subscription, etc., for shares, etc. (Act 105 V)

Decision and notice on subscription, etc., for shares, etc. (Act 105 IV, VI)

Approval of disposal of shares, etc. (Act 109 I)

Authorization for borrowings and issue of DICJ Bond (Act 126 I)

Borrowings and issuance of DICJ bonds (Act 126 I)

Disposal of shares, etc. (Act 109 I)

Debt guarantee (Act 126 II)

Request for a decision on the subscription, etc. for shares, etc. (in joint names with financial institutions, etc.) (Act 105 I, II)

Submission of the management base strengthening plan (Act 105 III)

Subscription, etc. for shares, etc. (Capital injection)(Act 107 I)

Application for the subscription, etc., for shares, etc.(Act 105 I, II)

Request for report on the implementation of the management base strengthening plan(Act 108 II)

Report on the subscription for shares, etc. (Act 107 II)

Application for approval of the disposal of shares, etc. (Act 109 I)

Report on the disposal of shares, etc. (Act 109 II)

Acknowledgement that it is necessary to take the measures prescribed in the above-mentioned item 1, and notice of an application period (Act 102 I ①,V)

Notes: 1. The design of this scheme focuses on the flow of DICJ activities. In the case of a financial institution or other being a labor bank, etc., the Minister of Health, Labor and Welfare also becomes involved in the activities shown in the diagram, and in the case of a financial institu-tion being the Shoko Chukin Bank, the Minister of Economy, Trade and Industry also becomes involved.

2. There are cases where Prime Minister in this scheme’s diagram entrusts the authority to the FSA Commissioner.

3. Entries in parentheses are governing regulations. The “Act” refers to the Deposit Insurance Act (Arabic numerals show the article number, Roman numerals show the paragraph number, and circled numerals show the item number.)

(2) Capital Injection Scheme

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy


136

III. Annex

I. DIC

J’sO

perations

(b) Outline of capital injection scheme for assuming financial institutions under Article 59, paragraph 1, item 6 of the Deposit Insurance Act

This scheme is one of the capital injection schemes based on the Deposit Insurance Act, which is used for an assum-ing financial institution that takes over the dealings of a failed bank and acquires business or implements merger, for the recovery of its capital adequacy ratio that declines upon the succession to the assets. No capital injection based on this scheme has been implemented until now.

Acknowledgement of the eligibility

DICJ Decision on Subscription, etc. for Preferred Shares, etc. as Financial Assistance (Act 64-2 III) Resolution by the Policy Board (Act 64 I, 64-2 II)

Assuming Financial Institutions or Holding Companies of Assuming Banks, etc.

Financial Institutions

/Others

Bank of Japan

Agreement on and resolution of merger, etc. Subscription, etc.

Prime Minister GovernmentPrime Minister andMinister of Finance

Prime Minister andMinister of Finance

Funding, etc.

Minister of Finance Prime Minister Minister

of Finance Prime Minister Minister of Finance

Acknowledgement of the eligibility (Act 61 I, III)

Application for acknowledgement of the eligibility in the joint names of the failed financial Institution (Act 61 I, II)

Report on the agreement on merger, etc. including the acknowledgement of eligibility (Act 65)

Application for subscription, etc., for preferred shares, etc. (Act 59 I ⑥, 62 II)

Submission of the plan for ensuring soundness (Act 64-2 I)

Notice of acknowledge-ment of eligibility, etc. (Act 61 VI, 62 IV)

Authorization for borrowings and issue of DICJ bonds (Act 42 I, II)

Debt guarantee (Act 42-2)

Approval of subscription, etc. for preferred shares, etc. (Act 64-2 III)

Report on receiving notice of acknowledge-ment of the eligibility, etc. (Act 61 VII, 62 IV)

Report on receiving notice of the report on the resolution, etc., of the general meeting of shareholders at which the agenda related to merger,including the acknowledgement of eligibility has been set (Act 66 IV)

Report on the resolution, etc., of the general meeting of shareholders at which the agenda related to the merger, including the acknowledgement of eligibility has been set (Act 66 I, III)

Report on an offer of subscription, etc., for preferred shares, etc. (Act 59 VI)

Conclusion of the agreement on financial assistance (subscription, etc., for preferred shares, etc.) (Act 64 IV)

Report on receiving an offer of subscription, etc. for preferred shares, etc.(Act 59 VII)

Request for approval of subscription, etc., for preferred shares, etc. (Act 64-2 III)

Report on matters decided by the DICJ with the resolution of the committee (Act 64 III) Borrowings

and issuance of DICJ bonds (Act 42 I, II)

Notice on the implementa-tion of the plan for securingsoundness(Act 64-2 V)

Report on the implementation of the plan for securing soundness (Act 64-2 V)

Subscription, etc. for preferred shares, etc. (capital injection) (Act 64-2)

Request for necessary cooperation upon intermediation of merger, etc. (Act 62 VI)

Intermediation of merger, etc. (Act 62 I)

Notes: 1. The design of this scheme focuses on the flow of DICJ activities. In the case of the assuming financial institution or other, being a labor bank, etc., the Minister of Health, Labor and Welfare also becomes involved in the activities shown in the diagram, and in the case of the financial institution being the Shoko Chukin Bank, the Minister of Economy, Trade and Industry also becomes involved.

2. There are cases where Prime Minister in this scheme’s diagram entrusts the authority to the FSA Commissioner.

3. Entries in parentheses are governing regulations. The “Act” refers to the Deposit Insurance Act (Arabic numerals show the article number, Roman numerals show the paragraph number and circled numerals show the item number.)

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

137

III. AnnexIII. A

nnexI. D

ICJ’s

Operations

(ii) Capital injection schemes for financial institutions based on the Financial Functions Strengthening Act(a) Outline of the scheme of subscription, etc., for shares, etc.

The capital injection scheme based on the Financial Functions Strengthening Act is carried out for the purpose of contributing to the development of local economies such as the facilitation of credit granting to small- and medium-sized enterprises, by providing public assistance to the efforts made by the financial institutions, etc. for the strength-ening of financial function within the area. This scheme is designed to carry out capital injection to individual financial institutions and up until March 2010 has been used for a total of 11 banks in response to applications filed based on Article 3 of said Act. In addition, capital injection was provided to three banks in FY 2011, as they quali-fied as financial institutions requiring capital injection as a special exception under the impact of the Great East Japan Earthquake pursuant to Article 8 of said Act’s Supplementary Provisions.

Financial Institutions, etc./Others

Bank of Japan

DICJ (Financial Function Strengthening Account, Act 43)

Financial institutions, etc. (Bank holding companies, etc. )

Subsidiaries

Contracted Bank

Prime Minister GovernmentCompetent Minister Competent Minister and

Minister of Finance Prime Minister andMinister of Finance

Minister of Finance

Competent Minister (Decision on the subscription for shares, etc.)

(Act 5 I)

Borrowing and issuance of DICJ bonds (Act 44 I, II)

Request for decision on the subscription for shares, etc. (in joint names with financial institutions, etc.) (Act 3 I, II)

Notice of decision(Act 5 VI)

Report on subscription for shares, etc.(Act 37 II)

Report on the content of agreement (Act 36 II)

Request for exercising the rights of a claiming conversion (Act 11 II)

Request for approval to exercise voting rights, etc. (excluding cases of compliance with the request of the competent minister) (Act 38 I)

Report on exercising voting rights, etc. (Act 38 II)

Request for approval of disposal (Act 38 I)

Report on disposal(Act 38 II)

Report on the agreement on lending or debt guarantee (Act 39 II)

Approval to exercise voting rights, etc. (Act 38 I)

Authorization (Act 44 I, II)

Debt guarantee (Act 45)

Approval of disposal(Act 38 I)

Approval ofdisposal (Act 36 I ⑫)

Opinion (Act 4 II)

Agreement (Act 5 V)Subscription, etc. Exercise of voting right Funding, etc.Disposal

Submission of the management base strengthening plan

(Act 4 I)

Application for subscription for shares, etc. (Act 3 I, II)

Notification of decision on the subscription for shares, etc. (Act 37 I)

Subscription for shares, etc. (capital injection) (Act 36 I ①)

Subscription for shares, etc.(Act 5 III)

Exercise of voting rights, etc.(Act 36 I ⑧,⑨)

Disposal (Act 36 I ⑪)

Approval to exercise voting rights, etc. (Act 36 I ⑨)

Receipt of gains and compensation for losses(Act 40, 41)

Conclusion of agreement on the entrustment of operations (Act 35 I)

Report onsubscription for shares, etc. (Act 36 I ⑤)

Request of approval to exercise voting rights and others (excluding cases of compliance with the request of the competent minister) (Act 36 I⑨)

Report on disposal(Act 36 I ⑬)

Conclusion of the agreement on lending or debt guarantee(Act 39 I)

Request forapproval of disposal(Act 36 I ⑫)

Report on exercising voting rights, etc.(Act 36 I ⑩)


(Act 4 I)

Submission of the management basestrengthening plan

(Act 4 I)

Examination Committee for Strengthening Financial

Functions (Act 48)

Notes: 1. The design of this scheme focuses on the flow of DICJ activities.

2. The competent minister follows up on the conditions of execution of the management base strengthening plan.

3. Entries in parentheses are governing regulations. The “Act” refers to the Special Measures Act for Strengthening Financial Functions (Arabic numerals show the article number, Roman numerals show the paragraph number, and circled numerals show the item number.)

4. If the financial institution, etc. that applies for the subscription for shares, etc., is a bank (except for financial institutions that require capital injection as a special exception under the impact of the Great East Japan Earthquake), the relevant subscription, etc. for shares, etc. shall be limited to the subscription for shares. (Act 3 I).

5. If the relevant subscription for shares, etc. is a subscription for shares, the relevant subscription for share shall be for shares with restricted voting rights, etc. (excluding financial institutions not meeting the criteria, etc.) (Act 5 II)

6. Prime Minister in this scheme’s diagram entrusts the authority to the FSA Commissioner.

7. The application concerning the subscription, etc. for shares, etc. and submission of the management base strengthening plan involving the financial institution that requires capital injection as a special exception under the impact of the Great East Japan Earthquake shall be made pursuant to the Act’s Supplementary Provisions 8 I, II, III and IV.

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy


138

III. Annex

I. DIC

J’sO

perations

(b) Outline of the scheme of subscription, etc. for shares, etc. of reorganized financial institutions

This scheme is one of the capital injection schemes based on the Financial Functions Strengthening Act which is used for financial institutions that undergo organizational restructuring (merger, company split and business trans-fer). It has been used for the Kiyo Holdings, Inc. (Kiyo Bank Ltd.) in November 2006.


Bank of Japan


Reorganized financial institutions, etc. (reorganized bank holding company, etc.)

Reorganized Subsidiaries

Contracted Bank


Minister of FinancePrime Minister andMinister of Finance

Minister of Finance

Competent Minister (Decision on the subscription, etc.,

for shares, etc.) (Act 17 I)

Borrowing and issuance of the DICJ bonds (Act 44 I, II)

Request for decision on the subscription, etc. for shares, etc. (in joint names with financial institutions, etc.)(Act 15 I, II)

Notice of decision(Act 17 VIII)

Report on subscription for shares, etc.(Act 37 II)

Report on the content of agreement (Act 36 II)

Request for exercising the rights of a claiming conversion (Act 21 II)

Request for approval to exercise voting rights, etc. (excluding cases of compliance with the request of the competent minister) (Act 38 I)





Approval to exercise voting rights, etc. (Act 38 I)




Approval ofdisposal (Act 36 I ⑫)

Opinion (Note 1)

(Act 16 V)

Agreement(Act 17 VIII)

Subscription, etc. Exercise of voting right Funding, etc.Disposal

Submission of the management base strengthening plan (Act 16 I, II, III)

Application for subscription, etc. for shares, etc. (Act 15 I, II)

Notice of decision on the subscription, etc., for shares, etc. (Act 37 I)

Subscription, etc., for shares, etc. (capital injection) (Act 36 I ②)

Subscription, etc., for shares, etc.(Act 17 III)



Approval to exercise voting rights, etc.(Act 36 I ⑨)



Report onsubscription, etc. forshares, etc. (Act 36 I ⑥)

Request of approval to exercise voting rights, etc. (excluding cases of compliance with the request of the competent minister) (Act 36 I ⑨)



Request forapproval of disposal(Act 36 I ⑫)

Report on exercising voting rights, etc.(Act 36 I ⑩)




Functions (Act 48)



3. Entries in parentheses are governing regulations. The “Act” refers to the Financial Functions Strengthening Act. (Arabic numerals show the article number, Roman numerals show the paragraph number, and circled numerals show the item number.)

4. If the financial institution, etc. that applies for the subscription for shares, etc. is a bank, etc. (except for financial institutions that require capital injection as a special exception under the impact of the Great East Japan Earthquake), the relevant subscription, etc. for shares, etc. shall be limited to the subscription for shares. (Act 15 I).

5. If the relevant subscription for shares, etc. is a subscription for shares, the relevant subscription for share shall be for shares with restricted voting rights, etc. (excluding financial institutions not meeting the criteria or financial institutions that require capital injection as a special exception under the impact of the Great East Japan Earthquake) (Act 17 II, the Act’s Supplementary Provisions 9 III).


7. (Note 1) applies when deemed necessary.

8. The application concerning the subscription, etc. for shares, etc. and submission of the management base strengthening plan involving the financial institutions that require capital injection as a special exception under the impact of the Great East Japan Earthquake shall be made pursuant to the Act’s Supplementary Provisions 9 I and II.

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

139

III. AnnexIII. A

nnexI. D

ICJ’s

Operations

(c) Outline of the purchase scheme of trust beneficial interest, etc.

This scheme is one of the capital injection schemes based on the Financial Functions Strengthening Act where capital injection is made upon the request to DICJ from cooperative central financial institutions (Shinkin Central Bank and The Shinkumi Federation Bank) that subscribe for preferred equity investments from cooperative financial institutions (Shinkin Banks and credit cooperatives), for the purchase of the trust beneficial interest, etc., pertaining to the preferred equity investments, etc., which said cooperative central financial institutions subscribe for. This scheme was used for the Shinkumi Federation Bank (Yamanashikenmin Shinkumi Bank) in September 2009. In addition, capital injection was provided for the Shinkumi Federation Bank (Nasu Shinkumi Bank) in March 2012 as a cooperative financial institution that had need of capital injection as a special exception under the impact of the Great East Japan Earthquake pursuant to Article 10 of said Act’s Supplementary Provisions.


Bank of Japan


Cooperative Central Financial Institution

Cooperative Financial Institutions

Contracted Bank

Prime Minister GovernmentCompetent Minister and


Minister ofFinance

Competent Minister (Decision on Purchase of Trust Beneficial Interest, etc.)

(Act 28 I)


Request for decision on the purchase of trust beneficial interest, etc. (in joint names with Cooperative Central Financial Institution) (Act 26)

Report on purchase of trust beneficiary rights, etc. (Act 37 II)

Notice of decision(Act 28 III)



Report on lending or debt guarantee(Act 39 II)




Request for approval of disposal(Act 36 I ⑫)

Approval of disposal (Act 36 I ⑫)

Lending or debt guarantee(Act 39 I)

Agreement(Act 28 III)

Purchase, etc. Funding, etc.Disposal


(Act 27 I)

Submission of the management base

strengthening guidance

program (Act 27 II)


strengthening guidance program

(Act 27 II)

Application for the purchase of trust beneficial interest, etc.(Act 25 I)

Acknowledge-ment of a trust on preferred investments, etc.

Purchase of trust beneficial interest, etc. (Act 36 I ③)

Subscription of trust beneficial interest, etc.

Application for a subordinated loan for subscribingpreferred investments (Act 25 I)

Guidance(Act 28 II)

Subscription, etc. for preferred investments, etc.(Act 25 I)

Request for submission of the management base strengthening plan (Act 25 I, III)


Notice of decision on purchase(Act 37 I)

Conclusion of the agreement on the entrustment of operations(Act 35 I)

Receipt of gains and compensation for losses (Act 40, 41)

Report on the purchase of trust beneficial interest, etc. (Act 36 I ⑦)



(Act 27 I)

Report on the agreement(Act 36 II)

Trust Banks or SPCs


2. The competent minister follows up on the conditions of execution of the management base strengthening plan and its guidance program.

3. Entries in the parentheses are governing regulations. The “Act” refers to the Special Measures Act for Strengthening Financial Functions. (Arabic numerals show the article number, Roman numerals show the paragraph number, and circled numerals show the item number.)


5. The request for the submission of the management base strengthening plan from cooperative financial institutions that require capital injection as a special exception under the impact of the Great East Japan Earthquake shall be made pursuant to the Act’s Supplementary Provisions 10 I, II, III and IV.

6. The request for the submission of the management base strengthening plan from cooperative financial institutions that require capital injection as a specified special exception under the impact of the Great East Japan Earthquake shall be made pursuant to the Act’s Supplementary Provisions 11 I, and the submission of the management base strengthening guidance plan as a specified special exception under the impact of the Great East Japan Earthquake shall be made pursuant to the Act’s Supplementary Provisions 10 II.

For the outline of the scheme in this case, see (e) Outline of the purchase scheme trust beneficial interest, etc. (cooperative financial institutions that have need of capital injection as specified special exceptions under the impact of the Great East Japan Earthquake).

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy


140

III. Annex

I. DIC

J’sO

perations

(d) Outline of the scheme of subscription, etc. for preferred equity investments, etc. and others of cooperative central financial institutions, etc.

This scheme is one of the capital injection schemes based on the Financial Functions Strengthening Act which is used for central credit cooperatives (Shinkin Central Bank and the Shinkumi Federation Bank). This scheme has been newly added under the amendment of the Financial Functions Strengthening Act in December 2008, but no capital injection under this scheme has been implemented until now.


Bank of Japan


Cooperative Central Financial Institutions, etc.

Special Cooperative Financial Institutions, etc. (Note 2)

Contracted Bank



Minister of Finance

Competent Minister (Decision onthe purchase of trust beneficial

interest, etc.) (Act 34-4 I)

Borrowings and issuance of the DICJ bonds (Act 44 I, II)

Request for decision on the subscription, etc. for preferred investments, etc. (in joint names with central credit cooperatives, etc.) (Act 34-2)

Notice of decision(Act 34-4 IV)

Report on subscription, etc. for preferred investments, etc. (Act 37 II)

Report on the content of agreement(Act 36 II)

Request of approval to exercise voting rights, etc. (excluding cases of compliance with the request of the competent minister) (Act 38 I)



Report on disposal (Act 38 II)


Approval to exercise voting rights, etc.(Act 38 I)




Approval of disposal(Act 36 I ⑫ )

Opinion (Note 1)

(Act 34-3 II)

Agreement(Act 34-4 III)

Subscription, etc. Exercise of voting right Funding, etc.Disposal

Submission of document describing cooperative function strengthening policy and the amount and contents of preferred

investments(Act 34-3 I)

Application for subscription, etc. for preferred investments, etc. (Act 34-2)

Notice of decision on the subscription, etc. for preferred investments, etc. (Act 37 I)

Subscription, etc. for preferred investments, etc. (capital injection) (Act 36 I ③-2)

Management guidance (Act 34-4 II)



Approval to exercise voting rights, etc.(Act 36 I ⑨)



Report onsubscription, etc. forpreferred investments, etc. (Act 36 I ⑦-2)

Request of approval to exercise voting rights, etc. (excluding cases of compliance with the request of the competent minister) (Act 36 I ⑨)

Report on exercising voting rights, etc. (Act 36 I ⑩)



Request for approval of disposal(Act 36 I ⑫ )

Submission of document describing cooperative function strengthening policy and the amount and contents of preferred

investments(Act 34-3 I)


Functions (Act 48)



3. Entries in parentheses are governing regulations. The “Act” refers to the Financial Functions Strengthening Act. (Arabic numerals show the article number, Roman numerals (capital letters) show the paragraph number, and circled numerals show the item number.)


5. (Note 1) applies when deemed necessary.

6. (Note 2) applies Special Credit Cooperatives, etc. stipulated in Act 34 Article 3 paragraph 3.

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

141

III. AnnexIII. A

nnexI. D

ICJ’s

Operations



Cooperative financial institutions that require capital injection as specified special exceptions under the impact of the Great East Japan Earthquake (Specifically targeted cooperative financial institutions, etc.: the Act’s Supplementary Provisions 13, Authorized specifically targeted cooperative financial institutions, etc.: the Act’s Supplementary Provisions 18 I)

Contracted Bank

Prime Minister

Minister ofFinance

Request for decision on purchase of trust beneficial interest, etc. (in joint names with Cooperative Central Financial Institution) (Act 26)

Report on purchase of trust beneficial interest, etc. (Act 37 II)

Agreement

(the Act’s Supple-mentary

Provisions 11 III)

Purchase, etc.

Submission of the management base strengthening guidance program from a cooperative

financial institution that requires capital injection as a specified

special exception under the impact of the Great East Japan

Earthquake (the Act’s Supplementary Provisions 11 I)

Submission of copies of the management base strengthening

guidance program of a cooperative financial

institution that requires capital

injection as a specified special exception

under the impact of the Great East Japan Earthquake as well as the trust contract (the Act’s Supplementary

Provisions, 11 II)






Provisions, 11 II)

Application for purchase of trust beneficial interest, etc.(Act 25 I)




Application for subordinated loan for subscribing preferred investments (Act 25 I)

Guidance(Act 28 II)

Management guidance contract (the Act’s Supplemen-tary Provisions 11 V)


Application for authorization of management improvement (the Act’s Supplementary Provisions 15 and 16 I)

Authorization of capital reorganization associated with business restructuring (the Act’s Supplementary Provisions 17 II)

Request for the submission of the management base strengthening plan from a credit cooperative that requires capital injection as a specified special exception under the impact of the Great East Japan Earthquake (the Act’s Supplementary Provisions 11 I)

Noticeof decisionon purchase(Act 37 I)


Report on thepurchase oftrust beneficialinterest, etc.(Act 36 I ⑦)



strengthening guidance program from a cooperative

financial institution that requires capital injection as a specified special exception

under the impact of the Great East Japan Earthquake

(the Act’s Supplementary Provisions 11 I)

Competent Minister

Application for authorization of management improvement (in the joint names of cooperative central financial institutions and specifically targeted cooperative financial institutions) (the Act’s Supplementary Provisions 17 I)

Opinion (the Act’s Supplementary Provisions 17 III)

Authoriza-tion of manage-ment improve-ment (the Act’s Supplemen-tary Provisions 16 III)

Application for authorization of capital reorganization associated with business restructuring (in the joint names of cooperative central financial institutions and specifically targeted cooperative financial institutions) (the Act’s Supplementary Provisions 17 I)

Authorization, etc. (Until the day after a lapse of 10 years from the purchase of trust beneficiary rights, etc.) (the Act’s Supplementary Provisions, 15)



Trust Banks

Competent Minister (Decision on purchase of trust beneficial interest, etc.) (the Act’s Supplementary Provisions 11 III)

Special management

base strengthening

guidance program (the Act’s

Supplementary Provisions, 16

II)

Implementa-tion

guideline for capital

reorganiza-tion, etc. (the Act’s

Supplemen-tary

Provisions 17 I)

Special management

base strengthening plan (the Act’s Supplementary Provisions, 16 I)

Special management


Trust Contract


Bank of Japan

GovernmentCompetent Minister and Minister of Finance Prime Minister andMinister of Finance

Competent Minister andMinister of Finance

Policy Board


Applica-tion for authori-zation of monetary grants

Authorization (the Act’s Supplementary Provision 18 IV)


Decision on monetary grants (the Act’s Supplementary Provisions 18 III)

Decision on the conclusion of a damage supplementary contract (the Act’s Supplementary Provisions 19 III)


Decision on the conclusion of a damage supplementation contract (the Act’s Supplementary Provisions 19 III)

Application for the conclusion of a loss compensation contract related to a damage supplementa-tion contract (the Act’s Supplementary Provisions 19 I)

Report on the application for the conclusion of a loss compensation contract related to a damage supplementa-tion contract (the Act’s Supplementary Provisions 19 II)

Conclusion of a contract on monetary grants (the Act’s Supplementary Provisions 18 V)

Conclusion of a loss compensation contract related to a damage supplementation contract (the Act’s Supplementary Provisions 19 V)

Report on decision on the conclusion of a damage supplementation contract (the Act’s Supplementary Provisions 19 IV)






Report on Application for monetary grants (the Act’s Supplementary Provisions 18 II)


Conclu-sion of the agreement on lending or debt guarantee(Act 39 I)

Funding, etc.Disposal


Receipt of gains/compensation for losses (Act 40, 41)

Request for approval of disposal (Act 36 I ⑫)

Report on disposal (Act 36 I ⑬)

Application for monetary grants necessary for the repayment of preferred investments (in the joint names of cooperative central financial institutions and specifically targeted cooperative financial institutions or counterparty financial institutions) (the Act’s Supplementary Provisions 18 I)

Application for monetary grants necessary for the repayment of preferred investments(the Act’s Supplementary Provisions 18 I)

Counterparty Financial Institution (the Act’s Supplementary Provisions, 18 I)

(e) Outline of the purchase scheme trust beneficial interest, etc. (cooperative financial institutions that have need of


2. The competent minister follows up on the conditions of execution of the management base strengthening plan and its guidance program.

3. Entries in parentheses are governing regulations. The “Act” refers to the Special Measures Act for Strengthening Financial Functions. (Arabic numerals show the article number, Roman numerals show the paragraph number, and circled numerals show the item number.)


This scheme is one of the capital injection schemes based on the Financial Functions Strengthening Act where, in cases where cooperative financial institutions (Shinkin banks and credit unions, etc.) that find it difficult to forecast their financial conditions with certainty due to the marked impact of the Great East Japan Earthquake (hereinafter referred to as “cooperative financial institutions that have need of capital injection as a specified special exceptions under the impact of the Great East Japan Earthquake”) seek capital injection through the subscription, etc. for preferred equity investments, etc., capital is injected into cooperative financial institutions that have need of capital injection as a specified special exceptions under the impact of the Great East Japan Earthquake through cooperative central financial institutions (Shinkin Central Bank and the Shinkumi Federation Bank, etc.) upon the request filed with the DICJ by such cooperative central financial institutions that made the subscription, etc. for preferred equity investments, etc. in cooperative financial institutions for the purchase of trust beneficial interest, etc. pertaining to the preferred equity investments, etc. In FY2011, capital injection was provided to six cooperative financial institutions that had need of capital injection as a specified special exception under the impact of the Great East Japan Earthquake.

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy


142

III. Annex

I. DIC

J’sO

perations



Cooperative financial institutions that require capital injection as specified special exceptions under the impact of the Great East Japan Earthquake (Specifically targeted cooperative financial institutions, etc.: the Act’s Supplementary Provisions 13, Authorized specifically targeted cooperative financial institutions, etc.: the Act’s Supplementary Provisions 18 I)

Contracted Bank

Prime Minister

Minister ofFinance

Request for decision on purchase of trust beneficial interest, etc. (in joint names with Cooperative Central Financial Institution) (Act 26)

Report on purchase of trust beneficial interest, etc. (Act 37 II)

Agreement

(the Act’s Supple-mentary

Provisions 11 III)

Purchase, etc.

Submission of the management base strengthening guidance program from a cooperative

financial institution that requires capital injection as a specified

special exception under the impact of the Great East Japan

Earthquake (the Act’s Supplementary Provisions 11 I)






Provisions, 11 II)






Provisions, 11 II)

Application for purchase of trust beneficial interest, etc.(Act 25 I)




Application for subordinated loan for subscribing preferred investments (Act 25 I)

Guidance(Act 28 II)

Management guidance contract (the Act’s Supplemen-tary Provisions 11 V)


Application for authorization of management improvement (the Act’s Supplementary Provisions 15 and 16 I)


Request for the submission of the management base strengthening plan from a credit cooperative that requires capital injection as a specified special exception under the impact of the Great East Japan Earthquake (the Act’s Supplementary Provisions 11 I)

Noticeof decisionon purchase(Act 37 I)


Report on thepurchase oftrust beneficialinterest, etc.(Act 36 I ⑦)



strengthening guidance program from a cooperative

financial institution that requires capital injection as a specified special exception

under the impact of the Great East Japan Earthquake

(the Act’s Supplementary Provisions 11 I)

Competent Minister

Application for authorization of management improvement (in the joint names of cooperative central financial institutions and specifically targeted cooperative financial institutions) (the Act’s Supplementary Provisions 17 I)

Opinion (the Act’s Supplementary Provisions 17 III)

Authoriza-tion of manage-ment improve-ment (the Act’s Supplemen-tary Provisions 16 III)

Application for authorization of capital reorganization associated with business restructuring (in the joint names of cooperative central financial institutions and specifically targeted cooperative financial institutions) (the Act’s Supplementary Provisions 17 I)

Authorization, etc. (Until the day after a lapse of 10 years from the purchase of trust beneficiary rights, etc.) (the Act’s Supplementary Provisions, 15)



Trust Banks

Competent Minister (Decision on purchase of trust beneficial interest, etc.) (the Act’s Supplementary Provisions 11 III)

Special management

base strengthening

guidance program (the Act’s

Supplementary Provisions, 16

II)

Implementa-tion

guideline for capital

reorganiza-tion, etc. (the Act’s

Supplemen-tary

Provisions 17 I)

Special management


Special management


Trust Contract


Bank of Japan

GovernmentCompetent Minister and Minister of Finance Prime Minister andMinister of Finance

Competent Minister andMinister of Finance

Policy Board


Applica-tion for authori-zation of monetary grants

Authorization (the Act’s Supplementary Provision 18 IV)



Decision on the conclusion of a damage supplementary contract (the Act’s Supplementary Provisions 19 III)


Decision on the conclusion of a damage supplementation contract (the Act’s Supplementary Provisions 19 III)

Application for the conclusion of a loss compensation contract related to a damage supplementa-tion contract (the Act’s Supplementary Provisions 19 I)

Report on the application for the conclusion of a loss compensation contract related to a damage supplementa-tion contract (the Act’s Supplementary Provisions 19 II)

Conclusion of a contract on monetary grants (the Act’s Supplementary Provisions 18 V)

Conclusion of a loss compensation contract related to a damage supplementation contract (the Act’s Supplementary Provisions 19 V)

Report on decision on the conclusion of a damage supplementation contract (the Act’s Supplementary Provisions 19 IV)






Report on Application for monetary grants (the Act’s Supplementary Provisions 18 II)


Conclu-sion of the agreement on lending or debt guarantee(Act 39 I)

Funding, etc.Disposal


Receipt of gains/compensation for losses (Act 40, 41)

Request for approval of disposal (Act 36 I ⑫)

Report on disposal (Act 36 I ⑬)

Application for monetary grants necessary for the repayment of preferred investments (in the joint names of cooperative central financial institutions and specifically targeted cooperative financial institutions or counterparty financial institutions) (the Act’s Supplementary Provisions 18 I)

Application for monetary grants necessary for the repayment of preferred investments(the Act’s Supplementary Provisions 18 I)

Counterparty Financial Institution (the Act’s Supplementary Provisions, 18 I)

5. In filing an application for authorization, if “the amount of assets > the amount of debt + the amount of preferred equity investments,” an application for authorization of management improvement shall be filed, and if the above is not applicable, an application for authorization of capital reorganization associated with business restructuring shall be filed.

6. Monetary grants under the provisions of Article 18 of the Act’s Supplementary Provisions shall be provided through the General Account (for a portion in excess of the insurance payout cost, through the Early Strengthening Account). (the Act’s Supplementary Provisions 21 I and II)

capital injection as specified special exceptions under the impact of the Great East Japan Earthquake)

This scheme is one of the capital injection schemes based on the Financial Functions Strengthening Act where, in cases where cooperative financial institutions (Shinkin banks and credit unions, etc.) that find it difficult to forecast their financial conditions with certainty due to the marked impact of the Great East Japan Earthquake (hereinafter referred to as “cooperative financial institutions that have need of capital injection as a specified special exceptions under the impact of the Great East Japan Earthquake”) seek capital injection through the subscription, etc. for preferred equity investments, etc., capital is injected into cooperative financial institutions that have need of capital injection as a specified special exceptions under the impact of the Great East Japan Earthquake through cooperative central financial institutions (Shinkin Central Bank and the Shinkumi Federation Bank, etc.) upon the request filed with the DICJ by such cooperative central financial institutions that made the subscription, etc. for preferred equity investments, etc. in cooperative financial institutions for the purchase of trust beneficial interest, etc. pertaining to the preferred equity investments, etc. In FY2011, capital injection was provided to six cooperative financial institutions that had need of capital injection as a specified special exception under the impact of the Great East Japan Earthquake.

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

143

III. AnnexIII. A

nnexI. D

ICJ’s

Operations

(3) Overview of Settlement of Accounts in FY2011

(i) General Account

(Overview of the settlement of account)Monetary grant for failure resolution of the Incubator Bank, etc. amounted to ¥126.4 billion and transfer to the Jusen Account amounted to ¥316.4 billion. Transfer to Liability Reserves amounted to ¥283.1 billion. Liability reserves increased from ¥137.3 billion in FY2010 to ¥420.5 billion.

• Major revenues included: 1) ¥702.9 billion in insurance premium revenues from financial institutions; 2) ¥268.7 billion in reversal from loan loss reserves; and 3) ¥26.8 billion in profits transferred from the contracted bank (RCC) in relation to the assets it acquired.

• Major expenses included: 4) ¥316.4 billion in transfers to the Jusen Account; 5) ¥283.1 billion in transfers to liability reserves; 6) ¥232.6 billion in transfers to loan loss reserves against loans to financial institutions under management etc.; 7) ¥127.4 billion in Financial Assistance Related Expenses (including ¥126.4 billion in monetary grants); and 8) ¥8.9 billion in loss on the sale of shares in affiliated companies which arose from the assignment of all of outstanding shares in the 2nd BBJ to AEON Bank.

• 9) Assets of the contracted bank (RCC) business as the account’s major assets increased by ¥172.7 billion to ¥280.3 billion due to the acquisition of assets of the Incubator Bank and an increase in loans as a result of transfer of claims on Jusen housing loan companies. For 10) assets of business related to financial institutions under management, ¥226.5 billion in loan loss reserves was reported against all of the ¥226.5 billion in outstanding loans of financial institutions under management.

• 11) Liability reserves as the account’s major liabilities amounted to ¥420.5 billion.

Profit and Loss Statement (Unit: 100 million yen, figures in < > indicate FY2010)

Expenses Revenues

7) Financial Assistance Related Expenses 1,274 <5> Insurance Premium Revenues 7,029 <6,793> 1)

Payments to Government 250 <339> Profits Transferred from a Contracted Bank 268 <331> 3)

4) Transfer to the Jusen Account 3,164 <–> Refund of Monetary Grant 10 <15>

5) Transfer to liability reserves 2,831 <1,373> Reversal from Loan Loss Reserves 2,687 <76> 2)

6) Transfer to loan loss reserves 2,326 <2,687> Non-Operating Revenues 112 <0>

8) Loss on sale of shares in affiliated companies

89 <–> Other Revenues 3 <3>

Other Expenses 175 <82>

Expenses Total 10,112 <4,488> Revenues Total 10,112 <7,221>

Current Profit — <2,732>

Balance Sheet (Unit: 100 million yen, figures in < > indicate FY2010)

Assets Liabilities and Net Assets

Securities and Others 1,133 <60> Borrowings — <923>

Financial Assistance Related Assets 231 <232> Liability Reserves 4,205 <1,373> 11)

Deposits and other assets related to asset purchase operations

24 <24> Other Liabilities 8 <11>

9) Assets Related to Contracted Bank 2,803 <1,076> Liabilities Total 4,214 <2,308>

10) Assets of financial institutions under management

— <871> Capital 4 <4>

Loans of financial institutions under management

2,265 <3,487>

Loan loss reserves (2,265) <(2,615)>

Other Assets 25 <46> Net Assets Total 4 <4>

Total 4,218 <2,312> Total 4,218 <2,312>

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy


144

III. Annex

I. DIC

J’sO

perations

(ii) Crisis Management Account

(Overview of the settlement of account)Although no sale of Resona Holdings shares was made, current profit for FY2011 amounted to ¥10.1 billion due to receipt of their dividends. Earned surplus increased from ¥246.4 billion in FY2010 to ¥256.6 billion.

1) Major revenues included ¥11.3 billion in dividends on Resona Holdings shares.2) Major liabilities came to ¥1.4 billion, including interest payments on DICJ bonds related to funds raised for the

acquisition of Resona Holdings shares.3) Resona Holdings shares as the account’s major assets remained unchanged from ¥711.6 billion in FY2010.4) Borrowings and DICJ bonds as the account’s major liabilities decreased by ¥916.2 billion to ¥455.2 billion.


Expenses Revenues

2) Non-Operating Expenses 14 <49> Dividends on Resona Holdings shares 113 <288> 1)

Other Expenses 0 <0> Profit on sale of Resona Holdings shares — <941>

Other Revenues 2 <1>

Expenses Total 14 <49> Revenues Total 115 <1,231>

Current Profit 101 <1,182>



Securities and Others 2 <9,063> Borrowings/DICJ Bonds 4,552 <13,714> 4)

3) Resona Holdings shares 7,116 <7,116> Other Liabilities 1 <3>

Other Assets 0 <1> Liabilities Total 4,553 <13,717>

Earned Surplus 2,566 <2,464>

Net Assets Total 2,566 <2,464>

Total 7,119 <16,182> Total 7,119 <16,182>

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

145

III. AnnexIII. A

nnexI. D

ICJ’s

Operations

(iii) Jusen Account

(Overview of the settlement of account)As the secondary loss related to the recovery of claims on Jusen housing loan companies was disposed of, current profit for FY2011 amounted to ¥456.6 billion. As a result, a ¥456.5 billion deficit as of the end of FY2010 was eliminated, and ¥80 million in earned surplus was generated.

• Major revenues included: 1) ¥1.0 billion in investment return from the Financial Stabilization Contribution Fund ; 2) ¥316.4 billion in transfers from the General Account; and 3) ¥69.4 billion in gains on cancellation of accounts payable due to the cancellation of the grant of operation promotion subsidy.

• Major expenses included: 4) ¥38.2 billion in operation promotion subsidy to compensate for half of the secondary loss incurred by the RCC in FY2010.

• Major liabilities included: 5) ¥100.0 billion in repayable payments received from the BOJ; and 6) ¥900.1 billion in contributions from the Financial Stabilization Contribution Fund.


Expenses Revenues

4) Operation Promotion Subsidy 382 <278> Income from investment 10 <35> 1)

Transfer to the Financial Stabilization Contribution Fund

3,175 <35> Transfer from the General Account 3,164 <–> 2)

Other Expenses 2 <3>Reversal of contribution to the Financial Stabilization Contribution Fund

4,254 <39>

Profit on cancellation of subsidy 694 <–> 3)


Expenses Total 3,559 <317> Revenues Total 8,126 <79>

Current Profit 4,566 <–> Current Deficit — <238>



Assets of the Financial Stabilization Contribution Fund

8,001 <9,080> Accounts Payable — <4,565>

Shares of Affiliated Company (RCC) 2,000 <2,000>Repayable Payments Received from the BOJ

1,000 <1,000> 5)

Per Contra on Loan Guarantees — <7,700> Loan Guarantees — <7,700>

Other Assets 50 <51> Financial Stabilization Contribution Fund 9,001 <10,080> 6)

Other Liabilities — <1>

Liabilities Total 10,001 <23,347>

Capital 50 <50>

Earned Surplus <Deficit> 0.8 <(4,565)>

Net Assets Total 50 <4,515>

Total 10,052 <18,832> Total 10,052 <18,832>

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy


146

III. Annex

I. DIC

J’sO

perations

(iv) Financial Revitalization Account

(Overview of the settlement of account)Current profit for FY2011 came to ¥14.0 billion due to an increase in income from asset purchase business, etc. The deficit decreased from ¥287.8 billion for FY2010 to ¥273.7 billion.

• Major revenues included: 1) ¥18.5 billion in revenues from asset purchase business, including dividend revenues from shares purchased from banks under special public management and 2) ¥5.9 billion in transfer payments made by the specified contracted bank (RCC) in relation to profits on the disposal of purchased assets pursuant to Article 53.

• Major expenses included: 3) ¥9.7 billion in interest payments on DICJ bonds related to funds raised for the acqui-sition of the shares placed in trust and warranty against defects purchased from banks under special public management.

• 4) Assets of Asset Purchase Business as the account’s major assets decreased by ¥2.9 billion due to the disposal of assets (shares placed in trust and warranty against defect) purchased from banks under special public management to ¥1,579.1 billion.

• 5) Borrowings and DICJ bonds as the account’s major liabilities decreased by ¥18.4 billion to ¥1,861.0 billion.


Expenses Revenues

Expenses of Asset Purchase Business 74 <57> Income from Asset Purchase Business 185 <175> 1)

Transfer to Loan Loss Reserves 257 <327>Transfer Payments by Specified Contracted Bank

59 <55> 2)

3) Non-Operating Expenses 97 <111> Reversal from Loan Loss Reserves 327 <388>

Other Expenses 4 <4> Other Revenues 0 <0>

Expenses Total 432 <502> Revenues Total 573 <620>

Current Profit 140 <118>



Securities and Others 34 <34> Borrowings DICJ Bonds 18,610 <18,794> 5)

4) Assets of Asset Purchase Business 15,791 <15,820> Other Liabilities 6 <4>

Loans to Specified Contracted Bank 47 <60> Liabilities Total 18,616 <18,798>

Other Assets 5 <5> Deficit <2,737> <(2,878)>

Net Assets Total <2,737> <(2,878)>

Total 15,878 <15,919> Total 15,878 <15,919>

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

147

III. AnnexIII. A

nnexI. D

ICJ’s

Operations

(v) Financial Functions Early Strengthening Account

(Overview of the settlement of account)Despite a decrease in income from the contracted bank (RCC), current profit for FY2011 amounted to ¥9.2 billion, with the earned surplus rising from ¥1,551.3 billion in FY2010 to ¥1,560.6 billion.

• Major revenues included: 1) ¥6.0 billion in income from the contracted bank (RCC) in relation to dividends, etc. on capital injection assets; and 2) ¥5.6 billion in interest on securities, etc.

• Major expenses came to ¥4.5 billion, including interest payments on DICJ bonds related to funds raised for loans to the contracted bank (RCC).

• 4) Loans to the contracted bank (RCC) as the account’s major assets remained unchanged from FY2010 at ¥595.4 billion, since no disposal was made of capital injection assets.

• 5) DICJ bonds as the account’s major liabilities decreased by ¥400.0 billion to zero. Outstanding debt was ¥5 million.


Expenses Revenues

3) Non-Operating Expenses 45 <85> Income from the Contracted Bank 60 <106> 1)

Other Expenses 0 <0> Non-Operating Revenues 56 <136> 2)



Current Profit 92 <219>



Securities and Others 9,644 <13,543> DICJ Bonds — <4,000> 5)

4) Loans to the Contracted Bank 5,954 <5,954> Other Liabilities 0 <1>

Other Assets 7 <17> Liabilities Total 0 <4,001>



Total 15,606 <19,514> Total 15,606 <19,514>

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy


148

III. Annex

I. DIC

J’sO

perations

(vi) Financial Functions Strengthening Account

(Overview of the settlement of account)As income from the contracted bank (RCC) increased, current profit for FY2011amounted to ¥3.9 billion, and earned surplus increased from ¥1.0 billion in FY2010 to ¥4.9 billion.

1) Major revenues included ¥3.9 billion in income from the contracted bank (RCC), such as dividends on capital injection-related assets.

2) Major expenses included ¥500 million in interest payments on DICJ bonds related to funds raised for loans to the contracted bank (RCC).

3) Loans outstanding to the contracted bank (RCC) as the account’s major assets increased by ¥176.5 billion to ¥526.2 billion, since ten new financial institutions received capital injection.

4) Borrowings and DICJ bonds as the account’s major liabilities increased by ¥172.6 billion to ¥521.6 billion.


Expenses Revenues

2) Non-Operating Expenses 5 <6> Income from the Contracted Bank 39 <0> 1)

Other Expenses 0 <0>Interest on Loans to Specified Contracted Bank

6 <5>



Current Profit 39 <–> Current Deficit — <0>



3) Loans to the Contracted Bank 5,262 <3,497> Borrowings―DICJ Bonds 5,216 <3,490> 4)

Other Assets 4 <3> Other Liabilities 1 <0>

Liabilities Total 5,217 <3,490>

Earned Surplus 49 <10>

Net Assets Total 49 <10>

Total 5,266 <3,500> Total 5,266 <3,500>

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

149

III. AnnexIII. A

nnexI. D

ICJ’s

Operations

(vii) Damage Recovery Distribution Account

(Overview of the settlement of account)Due to an increase in payments from financial institutions in relation to the balance of damage-recovery benefits to be distributed to the victims, current profit for FY2011 came to ¥300 million, increasing the earned surplus to ¥4.6 billion.

• Major revenues included: 1) ¥150 million in income from fees; and 2) ¥420 million in transfer payments made by financial institutions in relation to the balance of damage-recovery benefits to be distributed to the victims.

• Major expenses included: 3) ¥190 million in general administrative expenses necessary for such items as public notices related to the start of procedures for the extinction of claims on deposits.

• Of 4) Cash and Deposits as the account’s major assets, the balance of damage-recovery benefits to be distributed to the victims came to ¥4.83 billion.

Profit and Loss Statement (Unit: million yen, figures in < > indicate FY2010)

Expenses Revenues

3) General Administrative 199 <158> Commission Revenue 159 <196> 1)

Other Expenses 4 <0>Transfer Payments of Damage-Recovery Distribution Residual Fund

427 <1,561> 2)


Expenses Total 203 <159> Revenues Total 587 <1,759>

Current Profit 384 <1,600>

Balance Sheet (Unit: million yen, figures in < > indicate FY2010)


4) Cash and Deposits 4,895 <4,429> Borrowings 210 <170>

Other Assets 0 <0> Other Liabilities 53 <12>

Liabilities Total 263 <182>



Total 4,895 <4,430> Total 4,895 <4,430>

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy


150

III. Annex

I. DIC

J’sO

perations

(viii) Enterprise Turnaround Initiative Corporation Account

(Overview of the settlement of account)As the account manages capital contributions to the Enterprise Turnaround Initiative Corporation of Japan (ETIC), general administrative expenses translate into current loss. As a result, the retained loss increased from ¥6 million in FY 2010 to ¥10 million.

1) Major expenses included ¥4 million in general administrative expenses required for the management of the corporation’s capital.

2) Contributions to ETIC as the account’s major assets came to ¥19.6 billion.3) Contributions from financial institutions as the account’s major liabilities were ¥9.6 billion.


Expenses Revenues

1) General Administrative Expenses 4 <4> Non-Operating Revenues 0 <0>


Current Deficit 4 <4>



Cash and Deposits 19 <23> Contribution from Financial Institutions 9,659 <9,659> 3)

2) ETIC Shares 19,629 <19,629> Other Liabilities 0 <0>

Other Assets 0 <–> Liabilities Total 9,660 <9,660>

Capital 10,000 <10,000>

Deficit (10) <(6)>


Total 19,649 <19,653> Total 19,649 <19,653>

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

151

III. AnnexIII. A

nnexI. D

ICJ’s

Operations

(ix) Revitalizing Earthquake-Affected Business Account

(Overview of the settlement of account)As the account manages capital contributions to the Corporation for Revitalizing Earthquake-Affected Business, general administrative expenses translate into current loss. As a result, the retained loss came to ¥90,000.

1) Major revenues included ¥140 million in contributions for establishment of the Corporation for Revitalizing Earthquake-Affected Business.

2) Major expenses included ¥140 million in organization expense of the Corporation for Revitalizing Earthquake-Affected Business.

3) Contributions to the Corporation for Revitalizing Earthquake-Affected Business as the account’s major assets came to ¥18.6 billion.


Expenses Revenues

2) Organization expense of the Corporation for Revitalizing Earthquake-Affected Business

140 <–>Contributions for establishment of the Corporation for Revitalizing Earthquake-Affected Business

140 <–> 1)

General Administrative Expenses 0 <–> Non-Operating Revenues 0 <–>

Expenses Total 141 <–> Revenues Total 141 <–>

Current Deficit 0 <–>



Cash and Deposits 11 <–> Accounts Payable 0 <–>

3) Shares in the Corporation for Revitalizing Earthquake-Affected Business

18,668 <–>Liabilities Total 0 <–>

Capital 18,680 <–>

Other Assets 0 <–> Deficit (0) <–>

Net Assets Total 18,679 <–>

Total 18,679 <–> Total 18,679 <–>

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy


152

III. Annex

I. DIC

J’sO

perations

[Reference]

Borrowings and DICJ Bonds Balance (account total) (Unit: 100 million yen)

Category March 31, 2012 March 31, 2011 Difference

Borrowings 9,080 4,622 4,457

DICJ Bonds 19,300 36,300 (17,000)

Total 28,380 40,922 (12,542)

General Administrative Expenses (account total) (Unit: million yen)

Item FY2011 FY2010 Difference

Labor Cost 3,231 3,354 (122)

Non-personnel 3,808 5,708 (1,900)

of which are system administrative expenses

1,953 3,885 (1,932)

Total 7,039 9,063 (2,023)

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

153

III. AnnexIII. A

nnexI. D

ICJ’s

Operations

(4) Balance Sheets, and Profit and Loss Statements

(i) General Account Balance Sheet (Unit: million yen)


Item March 31, 2012

(Reference) March 31,

2011Item March 31,

2012


2011

(Current Assets) Cash and Deposit Short-Term Loans Money Deposited Securities Prepaid Expenses Accrued Income Accounts Receivable Loan Loss Reserves

(Fixed Assets) Financial Assistance Related Assets Purchased Assets Securities Loan Loss Reserves Deposits and Other Assets Related to Asset Purchase Operations Deposits and Other Claims Purchased Assets Related to Contracted Bridge Bank Contracted Bridge Bank Shares Assets Related to Contracted Bank Contracted Bank Shares Loans for Contracted Bank Assets of Financial Institutions Under Management Loans of Financial Institutions Under Management Loan Loss Reserves Tangible Fixed Assets Buildings Tools/Equipment/Fixtures Intangible Fixed Assets Investment and Other Assets Guarantee Money and Other Security Deposit

113,390638

20,022153

92,5400

322

—

308,47323,17829,279

0(6,100)

2,438

2,050280,30012,000

268,300

—

226,527(226,527)

178158203

324

6,149 794

5,064 219 — 1

1760

(105)

225,10923,28930,445

—(7,155)

2,421

4,170107,60012,00095,600

87,175

348,700(261,525)

187160262

263

(Current Liabilities) Short-Term Borrowings Accounts Payable Accrued Expenses Payable Money on Deposit Suspense Receipts

(Fixed Liabilities) Liability Reserves Reserves for Retirement Allowance

(Liabilities Total)

(Capital) Government Capital

Bank of Japan Capital

Private Capital

(Deficit) Deficit Brought Forward Current Profit

(Net Assets Total)

635—

612—212

420,773420,509

263

421,408

455150

150

155

———

455

93,238 92,300

906 9

22 0

137,565 137,348

216

230,804

455 150

150

155

— (273,260)

273,260

455

Total 421,863 231,259 Total 421,863 231,259

Note: Figures are rounded off.

Profit and Loss Statement (Unit: million yen)

Expenses Revenue

Item FY2011(Reference) FY2010 Item FY2011

(Reference) FY2010

(Current Expenses) Financial Assistance Expenses Monetary Grants

Loss on Sales of Purchased Assets

Administrative Expenses for Purchased Assets Cost of Commissioning Management and Collection Recovery Business Expenses for Operations to Purchase Deposits and Other Claims Expenses for Operations Related to Financial Institutions under ManagementExpenses for Operations Related to Reorganiza-tion of Financial Institutions and Others

Refunds of Insurance Premiums for Prior Periods Payments to Government General Administrative Expenses Transfer to Jusen Account Transfer to Liability Reserves

Transfer to Loan Loss Reserves Non-Operating Expenses Interest on Borrowing Administrative Expenses for Borrowings Miscellaneous Loss

(Extraordinary Expenses) Loss from Retirement of Fixed Assets Loss on Sales of Stocks of Subsidiaries and Affiliates

1,002,262127,468126,439

1,013

0

15

0

11,335

010

25,0236,036

316,467283,160

232,628131131

0—

8,9467

8,939

448,894 524 18

485

5

15

18

—

—50

33,9417,891

—137,348

268,786 332 330

1 —

0 0

—

(Current Revenue) Insurance Premium Revenues Deposit Insurance Premiums Income from Financial Assistance-Related Business Income from Purchased Assets

Profit on Sales of Purchased Assets

Interest on Loans of Financial Institutions Under Management

Income from Contracted Bank Business

Interest on Loans to Contracted Bank Transfer Payments by Contracted Bank Income from Contribution by Contracted Bridge Bank Refunded Monetary Grants Reversal from Loan Loss Reserves Non-Operating Income

1,011,208

702,932

00

0

53

27,045

21926,826

341,093

268,78611,260

722,155

679,397

0 0

0

140

33,281

15133,129

38 1,556 7,694

44

Total 1,011,208 722,155 Total 1,011,208 722,155

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy


154

III. Annex

I. DIC

J’sO

perations

The notes below refer to the items mentioned for the FY2011 settlement of accounts.

Important Accounting Principles and Other Relevant Matters

1. Evaluation Method for Securities

Cost method based on the periodic average method

2. Depreciation Method for Fixed Assets

Fixed installment method using the criteria under the Corporation Tax Act. The aggregate depreciation amount is as follows:

Financial Assistance Operating Assets ¥25 million

Tangible Fixed Assets ¥437 million

3. Appropriation Criteria for Reserves

(1) Loan Loss Reserves

For claims related to debtors for whom statutory facts of business failure (e.g. bankruptcy or composition) have occurred, or

debtors in an equivalent position, the estimated disposable collateral and estimated recoverable amount through guarantees

are subtracted from the amount of the claim, and the remainder is aggregated.

For debtors who face, or are highly likely to face, serious problems in the repayment of debts, although not yet in a state of

business failure, the estimated amount recovered through collateral etc., and the estimated amount in light of the debtors’

financial status and business performance, are reduced from the amount of the claim, and the remainder being aggregated as

loan loss reserves. Claims other than the above are aggregated on the basis of a bad debt ratio deemed reasonable.

The balance of the principal of loans outstanding to the Incubator Bank amounted to ¥226,527 million, as the DICJ received

¥144,829 million on March 23, 2012 as the first repayment from said borrower based on the civil rehabilitation plan of said

bank (repayment rate of 39%).

As the financial administrator notified the DICJ that the future repayment plan (interim and final repayments based on the

civil rehabilitation plan) was yet to be determined, the entire balance of principal of loans (loan-loss charge of 100%) has

been included as provisions for loan loss reserves.

(2) Reserves for Retirement Allowance

The required remuneration at the end of fiscal year is used as the criteria for appropriating reserves in preparation for

payment of retirement allowances for employees.

4. Provisions for liability reserves

At the end of each business year, the DICJ must calculate a liability reserve for the General Account, to be set aside in accor-

dance with ordinances of the Cabinet Office and the Ministry of Finance, as stipulated in Article 41 of Deposit Insurance Act.

Article 15 of the Ordinance for Enforcement on the Deposit Insurance Act stipulates that an amount of liability reserves that

must be set aside cumulatively in each business year shall be an amount equivalent to an amount obtained by subtracting the

combined amount of expenses (excluding the transfer to liability reserves) and loss carried forward from an amount of revenue

in the business year concerned.

5. Other Important Matters relating to Preparation of Financial Statements

(1) Accounting method for consumption tax: tax inclusive method

(2) Accounting criteria for revenue and expenses: accrual method

(3) Other

i) Regarding income from contracted bank under the provision of Article 7 of the Supplementary Provisions of Deposit

Insurance Act (Act No. 34 of 1971; hereinafter referred to as the “Act”), the DICJ received the payments statement

prepared under the account settlement for FY2011 from the RCC (contracted bank) on May 29, 2012. In the RCC, the

payments are accounted for in FY2011, but in the DICJ, they are accounted for as revenue in the following fiscal year in

accordance with the provision of Article 4, paragraph 2 of the Accounting Regulations. The amount of profit or loss

arising from such accounting is estimated at 30,253 million in transfer payments by the contracted bank (of which the

estimated amount of payments to the government is ¥22,778 million) in the following fiscal year.

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

155

III. AnnexIII. A

nnexI. D

ICJ’s

Operations

(ii) Crisis Management Account

Balance Sheet (Unit: million yen)


Item March 31, 2012


2011Item March 31,

2012


2011

(Current Assets)

Cash and Deposits

Securities

Suspense payments

Accrued Income

Accounts Receivable

(Fixed Assets)

Acquired Shares

Tangible Fixed Assets

Tools/Equipment/Fixtures

256

6

249

0

0

0

711,696

711,696

0

906,525

16

906,327

—

180

—

711,696

711,696

0

(Current Liabilities)

Short-Term Borrowings

DICJ Bonds (due for redemption within 1 year)

Discount on DICJ Bonds (due for redemption

within 1 year)

Accounts Payable

Accrued Expenses Payable

(Fixed Liabilities)

Reserves for Retirement Allowance

(Liabilities Total)

(Surplus)

Earned Surplus

Accumulated Fund

Current Profit

(Net Assets Total)

455,310

455,200

—

—

0

109

0

455,310

256,642

246,480

10,161

256,642

1,371,741

71,400

1,300,000

40

0

300

0

1,371,741

246,480

128,214

118,266

246,480

Total 711,952 1,618,222 Total 711,952 1,618,222



Expenses Revenue


(Reference) FY2010

(Current Expenses)

General Administrative Expenses

Non-Operating Expenses

Interest in Borrowing

Interest on DICJ Bonds

Administrative Expenses for DICJ Bonds

(Current Profit)

1,415

15

1,400

115

1,280

4

10,161

4,932

6

4,926

555

4,366

4

118,266

(Current Revenue)

Income from Operations such as the

Acquisition of Shares

Dividends of Purchased Shares, etc.

Profit on Sale of Purchased Shares, etc.

Non-Operating Revenue

11,577

11,340

11,340

—

237

123,198

123,010

28,888

94,122

188

Total 11,577 123,198 Total 11,577 123,198

Notes: 1. Current profit of ¥10,161 million is added to the accumulated fund for the next fiscal year, pursuant to the provision of Article 3 of the Ordinance of Enforcement of the Deposit Insurance.


II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy


156

III. Annex

I. DIC

J’sO

perations



1. Evaluation Method for Securities Cost method based on the periodic average method.

2. Depreciation Method for Fixed Assets Fixed installment method using the criteria under the Corporation Tax Act.

The aggregate depreciation amount is as follows:

Tangible fixed assets: ¥0 million



The required remuneration at the end of the fiscal year is used as the criterion for appropriating reserves in preparation for


4. Other Important Matters Relating to Preparation of Financial Statements


(2) Depreciation method of DICJ Bonds Issuing Cost Discount in DICJ Bonds Issue: equal depreciation over the period up to

the term of bond redemption


(4) Others

Because an interest swap transaction involved in interest payment on DICJ Bonds (receive-fixed, pay-floating interest-rate

swap) meets the requirement of exceptional treatment, the net amount of receipts and payment of interest rate swap transac-

tions is accounted for by adding to or subtracting from the interest on DICJ Bonds. This resulted in the interest payment on

DICJ Bonds decreasing by ¥3,267 million (in the previous fiscal year, a decrease of ¥5,772 million).

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

157

III. AnnexIII. A

nnexI. D

ICJ’s

Operations

(iii) Jusen Account



Item March 31, 2012


2011Item March 31,

2012


2011

(Current Assets)

Cash and Deposits

Short-Term Loan

Securities

Accrued Income

(Fixed Assets)


Buildings


Intangible Fixed Assets

Investment and Other Assets

Assets Relating to Financial Stabilization Fund

Shares of Affiliated Companies

Guarantee Money and Other Security Deposit

Per contra on Loan Guarantees

5,088

68

5,020

—

0

1,000,168

—

—

—

—

1,000,168

800,168

200,000

—

—

5,069

59

—

5,009

0

1,878,158

28

27

0

1

1,878,128

908,046

200,000

81

770,000


Accounts Payable

Advance Payments Received

(Fixed Liabilities)


Repayable Payments Received from Bank

of Japan

Charges against Assets Allotted in Operation

Loan Guarantees

(Statutory Reserves)

Financial Stabilization Fund

Counterpart of Private-Sector Contributions

Counterpart of Operating Income

(Liabilities Total)

(Capital)

Government Capital

(Surplus)

Earned Surplus or Loss

Deficit Brought Forward

Unappropriated Current Profit (loss)

(Net Assets Total)

—

—

—

100,000

—

100,000

—

—

900,168

900,168

—

1,000,168

5,000

88

(456,571)

456,660

5,088

456,620

456,578

42

870,132

20

100,000

111

770,000

1,008,046

1,007,000

1,046

2,334,799

5,000

(456,571)

(432,708)

(23,863)

(451,571)

Total 1,005,257 1,883,227 Total 1,005,257 1,883,227



Expense Revenue


(Reference) FY2010

(Current Expenses)

Grant For Claim Resolution Company

Operation Promotion Company


Transfer to Financial Stabilization Fund

(Extraordinary Expenses)

Loss from Retirement of Fixed Assets

(Current Profit)

355,995

38,255

218

317,522

0

456,660

31,785

27,847

365

3,572

0

—

(Current Revenue)

Income from Investment

Income from Investment of Financial

Stabilization Fund

Income from Special Operations Contributions

Paid from General Account

Reversal from Financial Stabilization Fund

Non-Operating Income

Reversal from Charge Against Assets

(Extraordinary Income)

Income from Cancellation of Subsidy

(Current Deficit)

743,229

1,054

190

316,467

425,400

4

112

69,427

—

7,921

3,572

306

—

3,984

32

25

—

23,863

Total 812,656 31,785 Total 812,656 31,785

Notes: 1. Current profit of ¥456,660 million is used to fill in loss carried forward from the previous fiscal year and the remainder is added to the accumu-lated fund for the next fiscal year, pursuant to the provisions of Article 5, paragraph 1 of the Ordinance of Enforcement of the Jusen Act.


II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy


158

III. Annex

I. DIC

J’sO

perations




Cost method based on the periodic average method.


Fixed installment method using the criteria under the Corporation Tax Act. The aggregate depreciation amount until

December 31, 2011 has been transferred to the general account.


Financial Stabilization Contributor Fund

In order to allocate the money to fund the claim resolution company and provide subsidies to help ensure its smooth opera-

tion, the financial stabilization contribution fund includes contributions from financial institutions who were investors or

creditors of specific Jusen companies, pursuant to the provision of Article 9, paragraph 1 of the Act on Special Measures

concerning Promotion of Disposal of Claims and Debts of Specific Jusen Companies (Act No. 93 of 1996; hereinafter

referred to as the “Jusen Act.”) and interest from the management of these funds, pursuant to the provision of Article 9,

paragraph 2 of the Jusen Act.




(3) Abolishment of Account for Disposal of Claims and Debts of Specific Jusen Companies

This account will be abolished within FY2012 after the repayment of contributions from the Bank of Japan and the comple-

tion of distribution of residual assets of the Financial Stabilization Contributor Fund (Article 30, paragraph 1 of the Jusen

Act) and the amount equivalent to the residual assets will be paid to the national treasury (Article 30, paragraph 2 of the

Jusen Act).

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

159

III. AnnexIII. A

nnexI. D

ICJ’s

Operations

(iv) Financial Revitalization Account



Item March 31, 2012


2011Item March 31,

2012


2011

(Current Assets)

Cash and Deposits

Short-Term Loans

Money Deposited

Securities

Suspense Payments

Prepaid Expenses

Accrued Income

Accounts Receivable

Loan Loss Reserves

(Fixed Assets)

Financial Assistance Related Assets

Purchased Assets

Loan Loss Reserves


Buildings




Loan to Specified Contracted Bank

3,996

96

200

1,494

1,668

19

17

378

122

—

1,583,877

1,579,166

1,604,872

(25,705)

10

8

2

0

4,700

3,831

94

1,972

1,335

—

22

15

356

35

(0)

1,588,109

1,582,096

1,614,855

(32,758)

12

9

3

0

6,000


Short-Term Borrowings



within 1 year)

Accounts Payable

Accrued Expensed Payable

Advance Payments Received

Suspense Receipts

(Fixed Liabilities)

DICJ Bonds

Discount on DICJ Bonds


(Liabilities Total)

(Deficit)

Deficit Brought Forward

Current Profit

(Net Assets Total)

811,413

211,000

600,000

(19)

109

297

26

—

1,050,231

1,050,000

201

29

1,861,644

(273,770)

(287,869)

14,099

(273,770)

429,904

229,400

200,000

(29)

112

280

28

112

1,449,906

1,450,000

(123)

29

1,879,810

(287,869)

(299,735)

11,865

(287,869)

Total 1,587,874 1,591,940 Total 1,587,874 1,591,940



Expenses Revenue


(Reference) FY2010

(Current Expenses)

Administrative Expenses for

Purchased Assets

Loss on Sales of Purchased Assets

Assets Purchasing Operation Expenses

Cost of Commissioning Management

and Collection Business


Transfer to Loan Loss Reserves


Interest on Borrowing





(Current Total)

43,294

7,451

7,264

102

85

422

25,705

9,713

337

9,051

324

0

14,099

50,212

5,787

5,583

102

101

493

32,758

11,173

331

10,038

803

0

11,865

(Current Revenue)

Income from Operations for Purchased Assets

Income from Purchased Assets

Profit on Sales of Purchased Assets

Transfer Payments by Specified

Contracted Bank

Interest on Loans to Specified

Contracted Bank

Reversal from Loan Loss Reserves

Non-Operating Revenues

57,393

18,586

16,427

2,159

5,993

50

32,758

4

62,077

17,553

15,560

1,992

5,556

68

38,892

6

Total 57,393 62,077 Total 57,393 62,077

Notes: 1. Current profit of ¥14,099 million is used to decrease loss brought forward from the previous fiscal year, pursuant to the provision of Article 25, paragraph 2 of the Ordinance of Enforcement of the Financial Revitalization Act.


II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy


160

III. Annex

I. DIC

J’sO

perations







Tangible fixed assets ¥26 million


(1) Loan Loss Reserves

For claims related to failed debtors or debtors in damage of collapse as well as debtors who face or are highly likely to face

serious problems in the repayment of debts although not yet in a state of business failure, the estimated amount recovered

through collateral, etc., and the estimated amount recovered in light of debtors’ financial status and business performance are

reduced from the amount of the claim, and the remainder is aggregated.

Claims other than the above are aggregated on the basis of a bad debt ratio deemed reasonable.

(2) Reserves for Retirement Allowance

The required remuneration at the end of the fiscal year is used as the criteria for appropriating reserves in preparation for




(2) Depreciation Method of DICJ Bonds Issuing Cost

Discount in DICJ Bonds Issue: equal depreciation over the period up to the term of bond redemption

(3) Appropriating Method of DICJ Bonds Issuing Cost

All the expenses are accounted for at the time of expenses.


(5) Other

Regarding payments by specified contracted bank under the provision of Article 53 of the Act on Emergency Measures for

the Revitalization of the Financial Functions (Act No.132 of 1998), the DICJ received the payments statement prepared

under the account settlement for FY2011 from the RCC (a specified contracted bank) on May 29, 2012. In the RCC, the

payments are accounted for as expenses in FY2010, but in the DICJ, they are accounted for as revenue in the following fiscal

year in accordance with the provision of Article 4, paragraph 2 of the Accounting Regulations. The amount of profit or loss

arising from such accounting is estimated at ¥3,549 million in the following fiscal year.

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

161

III. AnnexIII. A

nnexI. D

ICJ’s

Operations

(v) Early Strengthening Account



Item March 31, 2012


2011Item March 31,

2012


2011

(Current Assets)

Cash and Deposit

Securities

Suspense Payments

Accrued Income

Accounts Receivable

(Fixed Assets)


Buildings




Loans for Contracted Bank

965,203

21

964,445

2

734

0

595,408

2

1

0

0

595,406

1,356,080

23

1,354,294

2

1,760

—

595,408

2

2

0

0

595,406



DICJ Bonds Issuing Cost (due for redemption

within 1 year)

Accounts Payable

Accrued Expenses Payable

(Fixed Liabilities)


(Liabilities Total)

(Surplus)

Earned Surplus

Accumulated Funds

Current Profit

(Net Assets Total)

1

—

—

1

—

4

5

1,560,607

1,551,378

9,228

1,560,607

400,106

400,000

33

1

71

3

400,110

1,551,378

1,529,443

21,935

1,551,378

Total 1,560,612 1,951,489 Total 1,560,612 1,951,489



Expenses Revenue

Item FY2011(Reference)

FY2010 Item FY2011(Reference)

FY2010

(Current Expenses)





Loss on Redemption of Securities



(Current Profit)

4,614

57

4,557

2,079

1

2,476

0

9,228

8,594

59

8,535

7,091

3

1,440

0

21,935

(Current Revenue)

Income from the Contracted Bank

Interest on Loans to Contracted Bank


13,842

6,031

2,138

5,672

30,530

10,698

6,150

13,681

Total 13,842 30,530 Total 13,842 30,530

Notes: 1. Current profit of ¥9,228 million is added to the accumulated fund for the next fiscal year, pursuant to the provisions of Article 8 paragraph 1 of the Ordinance of Enforcement of the Early Strengthening Act.


II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy


162

III. Annex

I. DIC

J’sO

perations







Tangible fixed assets: ¥5 million




payment of retirement allowance for employees.



(2) Depreciation method of DICJ Bonds Issuing Cost



(4) Other

Regarding compensation for losses of contracted bank under the provision of Article 12 of the Act on Emergency Measures

for Early Strengthening of Financial Functions (Act No.143 of 1998), the DICJ received the application for compensation for

losses prepared under the account settlement for FY2011 from the RCC, a contracted bank, on May 31, 2012. In the RCC,

the payments are accounted for as expenses in FY2011, but in the DICJ, they are accounted for as revenue in the following

fiscal year in accordance with the provision of Article 4, paragraph 2 of the Accounting Regulations.

The amount of profit or loss arising from such accounting is estimated at ¥61,069 million.

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

163

III. AnnexIII. A

nnexI. D

ICJ’s

Operations

(vi) Financial Functions Strengthening Account



Item March 31, 2012


2011Item March 31,

2012


2011

(Current Assets)

Cash and Deposit

Securities

Accrued Income

Accounts Receivable

(Fixed Assets)


Buildings


Investments and Other Assets

Loans for Contracted Bank

491

19

339

132

0

526,200

0

0

0

526,200

363

20

269

72

—

349,700

0

0

0

349,700


Short-Term Borrowing



within 1 year)

Accounts Payable

Accrued Expense Payable

(Fixed Liabilities)

DICJ Bonds

Discount on DICJ bonds


(Liabilities Total)

(Surplus)

Earned Surplus

Accumulated Funds

Unappropriated Current Profit or Undisposed

Current Loss (-)

(Net Assets Total)

521,713

241,600

280,000

(14)

2

126

5

—

—

5

521,719

4,972

1,007

3,964

4,972

69,074

69,000

—

—

1

72

279,982

280,000

(22)

5

349,056

1,007

1,090

(83)

1,007

Total 526,691 350,064 Total 526,691 350,064



Expenses Revenue



FY2010

(Current Expenses)


Non-operating Expense

Interest in Borrowing



(Current Profit)

642

86

555

146

407

0

3,964

756

83

672

221

299

151

—

(Current Revenue)

Transfer Payments by Contracted Bank

Interest on Loans to Contracted Bank


(Current Deficit)

4,607

3,968

638

0

—

672

91

580

0

83

Total 4,607 756 Total 4,607 756

Notes: 1. Current profit of ¥3,964 million is added to the reduced accumulated fund for the next fiscal year pursuant to the provision of Article 4, paragraph 1 of the Order Regulating Financial Functions Strengthening Operations of the DICJ.


II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy


164

III. Annex

I. DIC

J’sO

perations










The required remuneration at the end of fiscal year is used as the criteria for appropriating reserves in preparation for




(2) Depreciation method of DICJ Bonds Issuing Cost


(3) Appropriating method of DICJ Bonds Issuing Cost All the expenses are accounted for at the time of expenses.

Accounting criteria for revenue and expenses: accrual method

(4) Other

Regarding payments by contracted bank under the provision of Article 41 of the Act on Special Measures for Strengthening

Financial Functions, the DICJ received the payments statement prepared under the account settlement for FY2011 from the

RCC (a contracted bank) on May 31, 2012. In the RCC, the payments were accounted for as expenses in FY2010, but in the

DICJ, they are accounted for as revenue in the following fiscal year in accordance with the provision of Article 4 paragraph

2 of the Accounting Regulations. The amount of profit or loss arising from such accounting is estimated at ¥4,267 million in

the following fiscal year.

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

165

III. AnnexIII. A

nnexI. D

ICJ’s

Operations

(vii) Damage Recovery Distribution Account



Item March 31, 2012


2011 Item March 31,

2012


2011

(Current Assets) Cash and Deposits Accounts Receivable

(Fixed Assets) Tangible Fixed Assets Tools/Equipment/Fixtures

4,8954,895

0

0

4,429 4,429

—

0

(Current Liabilities) Short-Term Borrowings Accounts Payable Accrued Payable

(Fixed Liabilities) Reserves for Retirement Allowance

(Liabilities Total)

(Surplus) Earned Surplus Accumulated Fund or Loss Carried Forward (-) Unappropriated Current Profit

(Net Assets Total)

259210490

4

263

4,6314,247

384

4,631

178 170

8 0

4

182

4,247 2,647 1,600

4,247

Total 4,895 4,430 Total 4,895 4,430



Expenses Revenues



FY2010

(Current Expenses) Expenses for Damage Recovery Benefit Distribution Operations Expenses related to Compensation for Creditors of Extinct Deposits, etc. Repaid Levies of Past Fiscal Years General Administrative Expenses Non-Operating Expenses Interest on Borrowings Miscellaneous Loss

(Current Profit)

203

21

199

00

384

159

0 —

158

0—

1,600

(Current Revenue)

Income from Fees

Transfer Payment of Damage Recovery Distribution Residual Fund Non-Operating Income

587

159

4270

1,759

196

1,561 1

Total 587 1,759 Total 587 1,759

Notes: 1. Current profit of ¥384 million is added to the accumulated fund for the next fiscal year, pursuant to the provision of Article 3, paragraph 1 of the Order on Special Provisions, etc., for the DICJ’s Operations, prescribed in Article 5 of Act on Damage Recovery Benefit Distributed from the Fund in the Bank Account Used for Crime.


II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy


166

III. Annex

I. DIC

J’sO

perations


Important accounting principles and others











II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

167

III. AnnexIII. A

nnexI. D

ICJ’s

Operations

(viii) Enterprise Turnaround Initiative Corporation Account



Item March 31, 2012


2011Item March 31,

2012


2011


(Fixed Assets) ETIC Shares

19190

19,629

23 23 —

19,629

(Current Liabilities) Accounts Payable

(Fixed Liabilities) Contribution from Financial Institutions Reserves for Retirement Allowance

(Liabilities Total)


(Deficit) Deficit brought forward Unappropriated Current Deficit

(Net Assets Total)

0

9,6609,659

0

9,660

10,000

(10)(6)(4)

9,989

0

9,660 9,659

0

9,660

10,000

(6) (2) (4)

9,993

Total 19,649 19,653 Total 19,649 19,653



Expenses Revenues



FY2010

(Current Expenses) General Administrative Expenses 4 4

(Current Revenue) Non-Operating Income

(Current Deficit)

0

4

0

4

Total 4 4 Total 4 4

Notes: 1. Current deficit of ¥4 million is carried forward to the next fiscal year, pursuant to the provision of Article 3, paragraph 2 of the Order on Special Provisions, etc. for DICJ’s Operations, prescribed in Chapter 8 of the Act on Enterprise Turnaround Initiative Corporation of Japan.



Important accounting principles and other relevant matters





The required remuneration at the end of the fiscal year is used as the criterion for appropriating for payment of allowances

for employees.




II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy


168

III. Annex

I. DIC

J’sO

perations

(ix) Revitalizing Earthquake-Affected Business Account



Item March 31, 2012

(Reference)March 31,

2011Item March 31,

2012

(Reference)March 31,

2011


(Fixed Assets) Shares in the Corporation for Revitalizing Earthquake-Affected Business

11110

18,668

2323—

19,629

(Current Liabilities) Accounts Payable

(Liabilities Total)


(Deficit) Unappropriated Current Deficit

(Net Assets Total)

0

0

18,680

(0)

18,679

0

9,660

10,000

(4)

9,993

Total 18,679 19,653 Total 18,679 19,653



Expenses Revenues

Item FY2011(Reference)FY2010 Item FY2011

(Reference)FY2010

(Current Expenses) Organization expense of the Corporation for Revitalizing Earthquake-Affected Business General Administrative Expenses

141

1400

4 4

(Current Revenue)Contribution for Establishment of the Corpora-tion for Revitalizing Earthquake-Affected BusinessNon-Operating Income

(Current Deficit)

1400

0

00

4

Total 141 4 Total 141 4

Notes: 1. A current deficit of ¥0 million is carried forward to the next fiscal year, pursuant to the provision of Article 3, paragraph 2 of the Order on Special Provisions, etc. for the DICJ’s Operations, prescribed in Chapter 8 of the Act on the Corporation for Revitalizing Earthquake-Affected Business.



Important accounting principles and other relevant matters






II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

169

III. AnnexIII. A

nnexI. D

ICJ’s

Operations

(5) Income and Expenditures on a Fiscal Year Basis (General Account) (Unit: million yen)

Fiscal year (ending March 31)

Income

Expenditure Net earningsLiability reserves

(end of FY)Insurance premiums

Paid into specialoperations funds

Total(including other)

1971 2,800 — 3,090 23 3,066 3,066

1972 4,560 — 5,030 43 4,987 8,053

1973 5,638 — 6,369 40 6,328 14,381

1974 6,364 — 7,563 57 7,505 21,887

1975 7,214 — 8,958 61 8,896 30,784

1976 8,402 — 10,739 69 10,670 41,454

1977 9,401 — 12,252 78 12,174 53,629

1978 10,571 — 14,024 105 13,919 67,548

1979 11,818 — 16,084 95 15,988 83,536

1980 12,767 — 18,392 104 18,288 101,825

1981 13,631 — 20,314 127 20,187 122,012

1982 20,107 — 28,209 119 28,090 150,103

1983 21,624 — 31,519 123 31,396 181,500

1984 23,232 — 34,769 118 34,650 216,151

1985 25,274 — 38,569 134 38,435 254,586

1986 40,739 — 55,236 140 55,096 309,683

1987 44,195 — 62,015 155 61,860 371,543

1988 48,759 — 68,021 143 67,878 439,421

1989 53,757 — 74,333 146 74,187 513,608

1990 60,381 — 87,944 156 87,788 601,396

1991 63,202 — 95,154 166 94,987 696,384

1992 63,149 — 94,411 20,169 74,241 770,626

1993 63,792 — 96,081 46,137 49,944 820,570

1994 64,972 — 98,140 42,680 55,459 876,030

1995 66,643 — 111,581 601,033 (489,452) 386,578

1996 461,992 — 532,743 1,314,428 (781,684) (395,106)

1997 462,956 — 464,317 163,228 301,089 (94,017)

1998 465,003 1,199,232 1,675,820 2,769,430 (1,093,610) (1,187,627)

1999 480,736 3,645,679 4,216,932 4,926,059 (709,127) (1,896,755)

2000 482,837 3,640,683 4,204,983 5,453,792 (1,248,809) (3,145,565)

2001 511,087 667,547 1,288,209 1,940,875 (652,666) (3,798,231)

2002 509,944 1,589,874 2,502,074 2,710,347 (208,273) (4,006,504)

2003 522,106 — 742,728 230,070 512,657 (3,493,847)

2004 529,386 — 656,581 139,783 516,798 (2,977,048)

2005 537,769 — 740,157 218,034 522,122 (2,454,926)

2006 540,496 — 754,717 232,457 522,259 (1,932,667)

2007 566,674 — 703,539 148,656 554,882 (1,377,784)

2008 611,676 — 828,608 361,326 467,281 (910,502)

2009 641,157 — 700,516 63,274 637,241 (273,260)

2010 679,397 — 722,155 311,545 410,609 137,348

2011 702,932 — 1,011,208 728,047 283,160 420,509

Notes: 1. Figures for FY1996 are the total of the general account, the special account for general financial institutions, and the special account for credit cooperatives, excluding inter-account transfers.

2. Figures for FY1997 to FY2002 are the total of the general account and the special operations account, excluding inter-account transfers.


II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy


170

III. Annex

I. DIC

J’sO

perations

(6) Trends in the Eligible Deposits and Liability Reserves (Unit: 100 million yen, %)


Deposits of insured financial institutions Liability reserves

Total (A) Eligible deposits (B)Percentage of

eligible deposits (B/A)Amount

Ratio of liability reserves to eligible

deposits

1971 811,947 722,530 89.0 30 0.004

1972 1,028,333 908,635 88.4 80 0.009

1973 1,163,127 1,041,867 89.6 143 0.014

1974 1,298,390 1,166,315 89.8 218 0.019

1975 1,506,295 1,361,978 90.4 307 0.023

1976 1,694,104 1,536,362 90.7 414 0.027

1977 1,898,729 1,720,021 90.6 536 0.031

1978 2,134,168 1,929,421 90.4 675 0.035

1979 2,355,713 2,098,222 89.1 835 0.040

1980 2,551,411 2,271,848 89.0 1,018 0.045

1981 2,853,013 2,513,458 88.1 1,220 0.049

1982 3,051,152 2,703,014 88.6 1,501 0.056

1983 3,314,905 2,904,025 87.6 1,815 0.062

1984 3,623,851 3,159,278 87.2 2,161 0.068

1985 4,077,602 3,391,086 83.2 2,545 0.075

1986 4,538,455 3,667,093 80.8 3,096 0.084

1987 5,159,521 4,047,485 78.4 3,715 0.092

1988 5,946,267 4,463,968 75.1 4,394 0.098

1989 6,852,420 5,015,977 73.2 5,136 0.102

1990 7,034,589 5,266,860 74.9 6,013 0.114

1991 6,949,005 5,262,427 75.7 6,963 0.132

1992 6,950,136 5,316,070 76.5 7,706 0.145

1993 7,049,752 5,414,448 76.8 8,205 0.152

1994 7,103,498 5,557,112 78.2 8,760 0.158

1995 7,176,043 5,506,005 76.7 3,865 0.070

1996 7,134,798 5,512,708 77.3 (3,951) —

1997 7,057,720 5,563,935 78.8 (940) —

1998 7,032,599 5,727,299 81.4 (11,876) —

1999 6,983,820 5,757,174 82.4 (18,967) —

2000 7,288,638 6,115,127 83.9 (31,455) —

2001 7,185,434 6,093,748 84.8 (37,982) —

2002 7,085,972 6,225,563 87.9 (40,065) —

2003 7,098,112 6,272,579 88.4 (34,938) —

2004 7,201,452 6,345,046 88.1 (29,770) —

2005 7,248,347 6,435,077 88.8 (24,549) —

2006 7,247,689 6,469,378 89.3 (19,326) —

2007 8,057,582 7,239,476 89.8 (13,777) —

2008 8,529,091 7,673,645 90.0 (9,105) —

2009 8,910,380 8,053,280 90.4 (2,732) —

2010 9,228,114 8,339,254 90.4 1,373 0.016

2011 9,560,998 8,660,957 90.6 4,205 0.049

Notes: 1. Total deposits include installment savings, installment deposits, money trusts, foreign-currency deposits, and negotiable certificates of deposits. 2. Eligible deposits exclude deposits, etc., under Article 3 and Article 3-2 of the Order for Enforcement of the Deposit Insurance Act (starting

from FY2003, specified settlement obligations pursuant to Article 69-2 of the Deposit Insurance Act are added to this amount). 3. Deposits of Insured Financial Institutions indicate the amount stated in the insurance premium statement submitted at the time of the first

payment. The balance of deposits, based on which the insurance premium is calculated, has been shifted from an end-of-term basis to an average-balance basis since FY2001.

4. The amount of liability reserves for FY1996 is the total of the general account, the special account for general financial institutions, and the special account for credit cooperatives.

5. The amount of liability reserves for FY1997 to FY2002 is the total of the general account and the special operations account.

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

171

III. AnnexIII. A

nnexI. D

ICJ’s

Operations

(7) Trends in the Eligible Deposits by Sector of Financial Institutions


Banks

City Banks Regional Banks Regional Banks II Trust BanksLong-Term

Credit BanksSub-Total

1971 291,887 155,820 72,288 75,116 12,637 607,750

1972 361,652 197,881 92,459 94,890 17,161 764,045

1973 390,376 234,971 112,806 107,608 19,287 865,050

1974 422,095 265,368 130,193 123,123 20,553 961,334

1975 492,275 309,839 150,886 144,659 24,935 1,122,596

1976 549,675 349,357 168,818 168,873 27,538 1,264,263

1977 616,978 392,214 189,451 191,583 28,495 1,418,723

1978 680,346 447,170 216,149 216,163 29,437 1,589,268

1979 716,846 495,561 238,518 235,449 30,907 1,717,282

1980 775,501 534,743 257,619 254,979 32,884 1,855,727

1981 858,768 594,977 284,712 280,850 35,043 2,054,352

1982 909,629 640,991 305,732 314,175 36,305 2,206,833

1983 980,934 683,330 324,447 347,616 38,164 2,374,493

1984 1,075,850 762,326 331,951 375,228 41,284 2,586,642

1985 1,170,486 799,476 344,605 379,637 41,196 2,735,402

1986 1,288,293 866,218 370,452 398,136 41,726 2,964,827

1987 1,459,750 959,959 400,190 413,042 46,898 3,279,841

1988 1,589,598 1,072,074 441,791 460,638 51,540 3,615,643

1989 1,802,093 1,201,684 479,043 503,841 63,691 4,050,355

1990 1,848,995 1,252,643 507,226 551,850 56,579 4,217,296

1991 1,751,883 1,291,490 516,815 571,262 43,776 4,175,226

1992 1,691,690 1,332,504 527,077 593,789 44,691 4,189,754

1993 1,696,570 1,370,506 538,795 598,415 43,472 4,247,760

1994 1,724,138 1,426,305 557,946 586,288 45,403 4,340,712

1995 1,707,172 1,446,151 558,640 528,250 45,475 4,286,763

1996 1,687,664 1,471,323 558,179 519,235 45,667 4,282,069

1997 1,722,444 1,506,152 555,491 494,825 45,878 4,324,884

1998 1,785,083 1,547,720 589,905 494,454 50,901 4,468,119

1999 1,814,901 1,604,219 539,327 484,961 45,825 4,489,267

2000 1,931,006 1,743,598 559,177 487,942 70,167 4,792,292

2001 2,001,671 1,735,006 553,258 459,941 29,935 4,780,983

2002 2,162,437 1,765,101 527,085 435,878 39,084 4,932,565

2003 2,201,857 1,734,728 538,755 420,536 43,185 4,944,609

2004 2,242,335 1,771,588 521,797 401,455 — 4,989,792

2005 2,291,286 1,790,966 528,290 384,971 — 5,059,495

2006 2,277,469 1,814,096 530,474 370,705 — 5,072,509

2007 2,279,329 1,854,276 540,595 365,248 — 5,803,991

2008 2,296,886 1,932,918 547,403 377,504 — 6,178,368

2009 2,358,433 1,995,704 551,058 379,472 — 6,523,577

2010 2,416,455 2,042,417 559,949 369,873 — 6,775,601

2011 2,470,893 2,115,036 574,587 371,050 — 7,056,559

Notes: 1. Regional Banks II are member banks of the Second Association of Regional Banks. Up to FY1991, inclusive of Sogo Banks (mutual financ-ing banks). Up to FY1987, figures are for Sogo Banks only.

2. Starting from FY2000, the Shinkin Central Bank, etc. are covered by the deposit insurance system.

3. Starting from FY2004, Long-Term Credit Banks are included in the Sub-Total.

4. Payment is made in the year following the year of calculation.

5. Starting from FY2008, Shoko Chukin Bank is newly included in the Federations account.

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy


172

III. Annex

I. DIC

J’sO

perations

(Unit: 100 million yen)

Shinkin Banks Credit Cooperatives Labor Banks Federations TotalFiscal Year

(ending March 31)

91,606 23,172 — — 722,530 1971

116,029 28,560 — — 908,635 1972

141,955 34,861 — — 1,041,867 1973

163,468 41,512 — — 1,166,315 1974

190,080 49,301 — — 1,361,978 1975

216,394 55,704 — — 1,536,362 1976

239,440 61,857 — — 1,720,021 1977

270,837 69,315 — — 1,929,421 1978

303,716 77,223 — — 2,098,222 1979

331,628 84,492 — — 2,271,848 1980

366,036 93,070 — — 2,513,458 1981

394,910 101,270 — — 2,703,014 1982

420,747 108,784 — — 2,904,025 1983

456,069 116,566 — — 3,159,278 1984

484,121 123,722 47,840 — 3,391,086 1985

519,093 131,878 51,294 — 3,667,093 1986

567,384 145,514 54,745 — 4,047,485 1987

625,745 163,494 59,085 — 4,463,968 1988

709,725 191,724 64,171 — 5,015,977 1989

767,348 213,072 69,142 — 5,266,860 1990

798,761 214,737 73,702 — 5,262,427 1991

829,330 218,542 78,443 — 5,316,070 1992

857,354 225,885 83,448 — 5,414,448 1993

896,321 231,583 88,494 — 5,557,112 1994

912,241 215,127 91,873 — 5,506,005 1995

925,522 209,762 95,353 — 5,512,708 1996

937,257 200,987 100,805 — 5,563,935 1997

961,186 192,674 105,319 — 5,727,299 1998

973,718 184,403 109,784 — 5,757,174 1999

1,022,015 178,539 117,096 5,185 6,115,127 2000

1,017,477 165,993 123,038 6,256 6,093,748 2001

1,009,185 145,628 130,887 7,295 6,225,563 2002

1,034,420 150,156 135,272 8,119 6,272,579 2003

1,053,286 153,993 138,994 8,979 6,345,046 2004

1,070,992 157,690 141,518 5,381 6,435,077 2005

1,087,533 158,798 144,552 5,984 6,469,378 2006

1,115,138 161,707 148,600 10,039 7,239,476 2007

1,138,423 163,300 153,363 40,188 7,673,645 2008

1,160,693 165,596 158,649 44,762 8,053,280 2009

1,181,735 170,420 165,379 46,118 8,339,254 2010

1,208,589 175,725 170,496 49,586 8,660,957 2011

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy

173

III. AnnexIII. A

nnexI. D

ICJ’s

Operations

(8) Trends in the Number of Insured Financial Institutions

Fiscal year (ending

March 31)

BanksShinkin Banks

Credit Cooperatives

Labor Banks

Federations Other TotalCity Banks Regional

Banks

Regional Banks II

(Note)Trust Banks Long-Term

Credit Banks Sub-Total

1971 14 61 71 7 3 156 483 524 — — — 1,163

1972 14 63 72 7 3 159 484 508 — — — 1,151

1973 13 63 72 7 3 158 484 498 — — — 1,140

1974 13 63 72 7 3 158 476 492 — — — 1,126

1975 13 63 72 7 3 158 471 489 — — — 1,118

1976 13 63 71 7 3 157 469 488 — — — 1,114

1977 13 63 71 7 3 157 468 490 — — — 1,115

1978 13 63 71 7 3 157 466 486 — — — 1,109

1979 13 63 71 7 3 157 462 484 — — — 1,103

1980 13 63 71 7 3 157 461 476 — — — 1,094

1981 13 63 71 7 3 157 456 474 — — — 1,087

1982 13 63 71 7 3 157 456 469 — — — 1,082

1983 13 63 71 7 3 157 456 469 — — — 1,082

1984 13 64 69 7 3 156 456 462 — — — 1,074

1985 13 64 69 11 3 160 456 449 — — — 1,065

1986 13 64 68 16 3 164 455 447 47 — — 1,113

1987 13 64 68 16 3 164 455 440 47 — — 1,106

1988 13 64 68 16 3 164 455 419 47 — — 1,085

1989 13 64 68 16 3 164 454 415 47 — — 1,080

1990 12 64 68 16 3 163 451 408 47 — — 1,069

1991 11 64 68 16 3 162 440 398 47 — — 1,047

1992 11 64 66 16 3 160 435 394 47 — — 1,036

1993 11 64 65 21 3 164 428 384 47 — — 1,023

1994 11 64 65 23 3 167 421 374 47 — — 1,009

1995 11 64 65 30 3 174 416 370 47 — — 1,007

1996 10 64 65 33 3 176 410 364 47 — — 997

1997 10 64 64 33 3 176 401 352 47 — — 976

1998 9 64 61 34 3 173 396 323 41 — — 933

1999 9 64 60 33 3 171 386 292 41 — — 890

2000 9 64 57 31 3 167 372 281 40 3 — 863

2001 7 64 56 29 3 165 349 247 21 3 — 785

2002 7 64 53 27 2 159 326 191 21 3 — 700

2003 7 64 50 27 2 155 306 181 13 3 — 658

2004 7 64 48 25 1 154 298 175 13 3 — 643

2005 6 64 47 21 1 148 292 172 13 3 — 628

2006 6 64 46 21 0 147 287 168 13 3 — 618

2007 6 64 45 20 0 149 281 164 13 3 — 610

2008 6 64 44 20 0 149 279 162 13 3 1 607

2009 6 64 42 19 0 147 272 159 13 3 1 595

2010 6 63 42 18 0 145 271 158 13 3 1 591

2011 6 64 42 18 0 146 271 158 13 3 1 592

Note: Regional Banks II are member banks of the Second Association of Regional Bank. Up to FY1991, inclusive of Sogo Banks. Up to FY1987, figures are the total of Sogo Banks.

II. Overview

of the D

ICJ’s

Activities

1. FailureR

esolution2. A

sset H

oldings3. P

ursuit of Liability

4. Capital

Injection

5. Crim

inal A

ccounts D

amages

6. PR

A

ctivities to E

nsure Public

Aw

areness


ooperation

9. The Medium

-Term

Goals

and Operational

Policy


174

III. Annex

I. DIC

J’sO

perations

For further information, comments or feedback on this publication,please contact Office for International Affairs,Deposit Insurance Corporation of Japan

Shin-Yurakucho Building, 9F1-12-1 Yurakucho, Chiyoda-ku, Tokyo, 100-0006, JapanTEL: +81-3-3212-6121, FAX: +81-3-3212-6085E-mail: [email protected]

For Annual Reports, press releases and the latest information,please visit http://www.dic.go.jp/english/

Printed in Japan Not for Sale

DEPOSIT INSURANCE CORPORATION OF JAPAN

April 2011－March 2012

AN

NU

AL R

EP

OR

T 2

01

1/

20

12

DEPO

SIT INSU

RANCE C

ORPO

RATIO

N OF JA

PAN

ANNUAL REPORT 2011/2012